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Russia sells the national debt of the United States and continues to buy gold

Russia sells the national debt of the United States and continues to buy gold

Last week it became known that in April and May Russia almost completely eliminated the reserves of the Treasury. Over these two months, Russia sold US bonds for a whopping $ 81 billion.

Russia sells the national debt of the United States and continues to buy gold

Last week it became known that in April and May Russia almost completely eliminated the reserves of the Treasury. Over these two months, Russia sold US bonds for a whopping $ 81 billion.

In 2010, Russia entered the top ten largest US bondholders for $ 176.3 billion.

Russia sells the national debt of the United States and continues to buy gold

Since in May the reserves of the Treasury fell to $ 14.9 billion, the reserves of the country’s treasuries are now below the threshold of $ 30 billion, which would allow it to be included in the monthly report of the Ministry of Finance on the main holders of the Treasury.

The US Treasury published a list of 33 countries, which includes the largest holder of US bonds – China, as well as the smallest holder of the treasury – Chile. Russia is no longer on this list.

So why did Russia lose such a volume of Treasuries? And what will she do with all the funds received from the liquidation of the US debt instruments?

The head of the Central Bank of the Russian Federation Elvira Nabiullina explained that the reduction in inventories occurred after a systematic assessment of all types of risks, including financial, economic and geopolitical risks.

Meanwhile, Russian gold reserves are steadily growing. For 39 months in a row, the proportion of precious metals reached a maximum level in 20 years.

Russia sells the national debt of the United States and continues to buy gold

According to the Central Bank of Russia, in May gold reserves of Russia grew by 1% to 62 million troy ounces at a cost of $ 80.5 billion. According to Nabiullina, diversification of reserves was facilitated by gold purchases.

Russia sells the national debt of the United States and continues to buy gold

Against the background of geopolitical conflicts, along with the tension in trade provoked by the US earlier this year, some countries followed this example. Turkey reduced its treasury reserves by half, in November it owned Treasury for $ 62 billion, in May – for $ 32.6 billion.

Germany also reduced its US bond holdings, in April it owned US $ 86 billion of US bonds, in May – $ 78.3 billion.

And while Russia and other countries are actively buying physical gold, speculators have lowered their net long positions to the lowest level since January 2016.

Russia sells the national debt of the United States and continues to buy gold

However, hedge funds and other large speculators in the week, up to July 17, raised interest rates on gold prices to their highest level since 2006, according to government data.

Russia sells the national debt of the United States and continues to buy gold

A massive surge in short positions using borrowed funds could potentially become a catalyst for maintaining the usual seasonal situation with gold prices.

Russia sells the national debt of the United States and continues to buy gold

Especially if Trump continues to exert pressure to reduce the dollar.

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