Gold Is Also Hard To Stop. The Central Bank Is Powerless.

Beijing time on December 12th, the Russian Central Bank released data show that the central bank's gold reserves in just a week reduced by 4 billion 300 million U.S. dollars.

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Under the pressure of massive capital flight, the Central Bank of Russia has no choice but to sell gold reserves to cope with inflation and stability.

Earlier, Russia has been heavily overweight.

The data provided by the World Gold Association (WGC) show that Russia has significantly increased the volume of gold purchases this year.

Up to now, Russia has increased 115 tons of gold reserves, while the new reserves in 2013 and 2012 were 77.5 tons and 75 tons respectively.

Data released by the International Monetary Fund (IMF) in October 28th also pointed out that in September this year, the Central Bank of Russia has increased its holdings of gold reserves for sixth consecutive months, increasing its holdings of 37 tonnes of gold to 1149 tonnes in a single month.

"The Central Bank of Russia will not accumulate gold for no reason. Gold reserves can be used to deal with the worst.

In the hypothetical case, even if Russia finds that its US dollar reserves are no longer useful, there is still plenty of gold as a substitute. "

Nick Brown, an analyst at the French Foreign Trade Bank (NatixisBank), said NickBrown.

A large number of Russian "

"On the one hand, we should be prepared for geopolitical problems and" long term economic war "with the European and American countries. On the other hand, because of the repeated sanctions imposed by western countries, international investors take a wait-and-see attitude towards buying Russian gold, which leads to Russian enterprises' difficulty in selling gold to overseas. The Central Bank of Russia can only increase its purchase plan and digest its gold output.

Until recently, Russia's central bank had to sell gold reserves to cope with inflation and ruble's decline as crude oil prices dropped sharply, plus sanctions, and the ruble fell sharply against the US dollar.

Compared with the beginning of the year, the rouble has depreciated nearly 40% against the US dollar. By the end of this year, inflation is expected to reach 9%, much higher than the 4% inflation target of the Central Bank of Russia.

Yesterday, the Central Bank of Russia announced a further increase in interest rates, from 9.5% to 10.5%, in an attempt to curb high inflation and the continued depreciation of the rouble exchange rate.

Russia's central bank also said that if inflation continues to accelerate, it will continue to raise interest rates.

Under the Western sanctions, Russia's imports were restricted, and the ruble depreciated and prices rose. Russia's inflation rate reached 9.1% in November, far exceeding the 5.5% target set by the Russian central bank.

The central bank expects inflation to rise to more than 10% in the first quarter of next year, followed by a slight decline.

Prior to this, the Russian Central Bank announced at the end of October at the conference on interest rates, unexpectedly announced a substantial increase in benchmark interest rates by 150 basis points, to 9.50%, far ahead of the market generally expected to increase by 50 basis points.

But contrary to expectations, the Russian Central Bank announced yesterday that interest rate decisions were made, and the rouble did not rise against the US dollar and fell to a record low again, with a maximum of 55.36 rubles of 1 dollars, while gold prices rose 2.75% to 1240 dollars / ounce this week after the central bank substantially sold gold.

"Any effort to curb the sale of rouble will do more harm than good."

Lars Christensen, chief analyst at Danske Bank, said: "if Russia's central bank raises interest rates by 400 basis points, it will still be a problem if the margin is enough."

"Although many people blame the central bank, the Russian economy has suffered more.

But I don't think the central bank has other options. "

Liza Ermolenko, Capital Economics economist, said: "the collapse of the rouble is largely due to the fall in oil prices, and policymakers have little choice but to devalue rouble."

"The central bank has done its best."

Natalie Orlova, chief economist of Alfa bank in Russia, said in an interview: "the central bank can not significantly deteriorate the quality of credit at constant speed." (Natalia)

On the other hand, it also reflects the deterioration of investment trends we see. "