A recent announcement shows that China is still very committed to increasing its gold reserves; and that Russia and China are excellent economic and trading partners.
Here’s the story from Reuters:
“VTB Bank, Russia’s second-largest lender, said on Tuesday:
VTB plans to supply 15-20 tonnes of gold to China in the next 12 month
In April, VTB said it aimed to supply between 80 and 100 tonnes (2.57-3.22 million troy ounces) of gold to China per year;
In the second quarter of 2016, VTB dispatched its first batch of gold to China, becoming the first Russian bank start direct supplies of physical gold to the world’s largest buyer and consumer of the precious metal.”
The timing of this announcement is interesting, just 17 days ahead of when the Chinese Yuan will be including in the Special Drawing Rights (SDR) currency basket of the IMF.
This press release from VTB Bank also speaks volumes. First, it says that Russia has accumulated enough physical gold to export a significant amount to China. Second, this says that China has an almost insatiable demand for the so-called “barbarous relic,” and there’s a reason it wants to import an additional 80-100 tons per year.
Does China want more ounces to one day partially back the Yuan with gold? Or does it want more gold to satisfy physical demand from the Shanghai Gold Exchange?
You know the drill – tell us what you think in the comments section below.