Since 2021, central banks have been on a historic gold-buying spree, pushing the metal to consecutive record highs. Now, attention turns to whether this strategy could extend to other precious metals, with Russia potentially leading the charge.
Recent reports reveal that the Russian government is considering a significant investment—51 billion rubles ($535.5 million) over the next three years—to bolster its reserves of precious metals. This comes from a line item in Russia’s Draft Federal Budget, published on September 30, hinting at the government’s plans to expand its stockpile beyond gold to include silver and platinum group metals (PGMs).
In a statement highlighted by Interfax, the Ministry of Finance emphasized the strategic importance of the move. “Building a reserve of refined precious metals as part of Russia’s State Fund will ensure a balanced federal budget and support stable economic growth. It will also meet the nation’s industrial needs in the event of a crisis,” the Ministry said.
Although details of a specific purchasing program have not been disclosed, analysts are intrigued by the possibility of silver becoming a component of Russia’s foreign reserves. This shift could reinvigorate silver’s status as a monetary metal, a role it hasn’t officially held since the mid-19th century when nations began abandoning the silver standard.
While silver has long been favored by retail investors as a monetary asset, some experts believe Russia’s interest in the metal may be driven more by its industrial uses. Silver plays a key role in sectors like renewable energy, particularly in the production of solar panels. This year, industrial demand for silver is projected to rise 9% to 710.9 million ounces, with the solar sector alone consuming 232 million ounces, according to the Silver Institute. The silver market is expected to see its second-largest supply deficit on record.
Willem Middelkoop, founder of Commodity Discovery Fund, first drew attention to the Russian budget report, speculating that there could be a dual motive behind the country’s interest in silver. While industrial applications are a primary factor, Middelkoop suggested Russia might also recognize the metal’s manipulated pricing in global markets, particularly through the COMEX futures system. “Russia will also be aware silver is manipulated… and I wouldn’t be surprised if there’s a monetary aspect involved,” he told Kitco News.
Russia’s potential involvement in PGMs like palladium and platinum is seen as less surprising, given its status as a leading producer. In 2023, Russia accounted for 28% of global platinum production. However, its exports of these metals, including palladium and rhodium, have been hampered by Western sanctions following its 2021 invasion of Ukraine.
Analysts suggest that, in addition to creating a strategic stockpile, Russia’s move to purchase domestic PGM output would provide vital support to its mining industry. Russia once held significant reserves of PGMs but sold them off in 2012.
This expansion of precious metal reserves aligns with broader economic strategies laid out by Russian President Vladimir Putin. Last month, Putin called for limiting the export of key resources such as uranium, titanium, and nickel, reinforcing Russia’s emphasis on controlling critical metals amid growing geopolitical tensions.
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