Russian Finance Minister Anton Silwanov said that Russia may consider investing part of its national wealth fund in gold, adding that he expects investment in the precious metal is more sustainable in the long run than financial assets.
Russia is one of the world’s largest gold producers, while its central bank has been the main buyer of the yellow metal in the past few years. The central bank cut its share of assets in US dollars in its reserves, in part due to Western sanctions imposed on Moscow in 2014.
Silvanov told reporters on Tuesday that what the Ministry of Finance is currently proposing is that the new investment structure of the fund simulate the structure of foreign exchange reserves for the central bank, and exclude gold.
The Ministry of Finance’s National Wealth Fund accumulates revenue from oil exports and was initially earmarked to support the pension system. It was valued at $ 124 billion on December 1.
Gold reserves at the Russian Central Bank amounted to 72.7 million ounces, at a value of $ 105.9 billion on December 1.
Usually, Russian gold mining companies sell their production to Russian commercial banks, which resell them to the central bank.
“The Ministry of Finance does not propose to invest (the fund) in precious metals, although one might think and study this … My view is that gold may be present when investing reserve funds,” Silvanov said.
In November, his ministry proposed spending 1 trillion rubles ($ 16 billion) of the National Fund’s wealth to support infrastructure and exports projects between 2020 and 2022 while trying to boost economic growth.
The government will be able to use funds from the fund when its liquid assets exceed 7 percent of gross domestic product, something the Finance Ministry expects will happen in 2020.
(Dollar = 61.9450 Russian ruble)