Interfax Report: Russia To Increase Silver Holdings In State Fund | Arcadia Economics

The plan is to acquire refined gold, silver, platinum, and palladium to increase the share of highly liquid assets in the state fund. Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics. And today, it’s some interesting news that came out just about a day ago, a report of Russia, perhaps, investing into silver as well. And especially at a time where we’ve seen a lot of central banks look towards gold have been keeping an eye on any signs of that on the silver side of which, let’s say we have one early indication, which we will dig into as well as a whole host of other news that is coming out and a few things to review ahead of next month’s BRICS meeting at the end of October.

And one quick note to be clear, I don’t by any means think it’s a guarantee that they will announce something, let alone launch something next month. Is it possible? Sure. I would say if the two, I would think more likely that perhaps there would be further detail or perhaps an announcement or some sort of commentary. I don’t get the feeling that it is ready to be launched yet. Again, there’s a lot that’s unknown, but I saw that Jim Rickards had a new article out today, which I did not get to yet. But just in terms of some thoughts of at least how I’m approaching it heading towards that.

And certainly we’ll keep you posted as more happens. So great reason to hit that subscribe button down there. And with that said, let us dig in with a quick look at gold and silver recording about noon on Wednesday afternoon and you can see gold selling off about $18 today. Well, it’s interesting. We have silver diverging up 32 cents following copper, which is also up a percent and a half. So one of the days, a lot of the time we do see gold and silver highly correlated little bit of divergence here today. And either case, I think if you’re a long term gold and silver holder to see gold still at 2672 in the December futures and silver above $32 I think that comes as good news to most people, hopefully for you too as well.

So anyway, let us get right to the main event we have here. And I’m going to phrase this clearly. This was retweeted by William middle coop, who many of you know, very well respected analyst and fund manager, and he got this on Bloomberg. I’ve not been able to find Interfax actually posting this story on their website, which I don’t think they necessarily posted. Everything I’ve seen a couple other sites reference this. And unfortunately, my search is to actually see this stated in the Russian finance ministry federal budget for 2025 and beyond. Not an easy document to find.

I don’t know if that’s actually available yet. But anyway, let’s take a look through what we have here. Russian Minister of Finance proposes to keep spending on precious metals at 51 and a half billion rules in 2025. Now, as a reminder, we had this news came back in the beginning of September, rush to allocate $1.9 billion for purchases of currency gold from September 6 to October 4. So we’re almost coming up on the end of that time period. And that was an increase. They went up to 172.9 billion rubles. Previous month had been 24.65. So about a 7x there.

And anyway, back to the initial one here. Finance Ministry proposes to allocate the 51 and a half billion rubles to buy precious metals and gemstones. List of metals that are planned to be purchased includes platinum and palladium, the state previous metal depository, Gokram, which built palladium reserves during the Soviet period, sold all of them by 2012. Has not started buying the metal again until recently. Plans for the budget allocations in 2025 correspond to the limit for precious metals and gemstone purchases in 23 and 24. And here the plan is to acquire refined gold, silver, platinum, and palladium to increase the share of highly liquid assets in the state fund, the explanatory note says.

So I will keep digging for that explanatory note. I’d love to read it and see exactly what they said. And I know that the platinum news makes one of our Arcadia superfans, Neil, quite excited. But the big significance here is that, as I mentioned earlier, we’ve seen central banks buying gold. No signs of that in silver. And this really would be the first government, you know, if you want to put governments and central banks into one bucket. At least since this rally and the change in central bank buying in gold that began in 2022 and certainly throughout this year, obviously China, the industrial demand has been strong.

I have not seen evidence of large retail or necessarily the government buying silver. So again, is this going to change things overnight? No. But more so what seems significant is that, again, if you go back five years and talk about gold and silver, there was a lot of stuff that, yeah, well, this should happen. Maybe one day it will. Whereas now gold certainly being viewed a bit differently. I’ve wondered if that a similar transition might occur in silver at some point. And let’s say this doesn’t necessarily guarantee that condition, but at least putting one of the first blocks in place.

And either case, we’ll look and see what else we can find about that. A few other notes, though, is that here is the GoCrams website, which can see Ministry of Finance Russian Federation on May 30, 2011. Main objectives are the formation of a state fund of Russia with precious metals, gold, silver, platinum, and palladium platinum and platinum group metals. So in one sense, that is not entirely new, although here we have a note as I was searching around to see, because again, this is share talk, not previously familiar with them, but they did mention the same story.

They’re quoting that same story from Interfax. The reports have suggested the Russian finance ministry intends to buy 52 billion rubles worth of precious metals and stones. And they mentioned this will include platinum, palladium, which have not formed part of strategic reserves since 2012. And also again, here is the TASS article. So certainly something to keep an eye on. And I mentioned that because something that I’ve talked about previously on the show, but in case you did not happen to catch that. You look at World Gold Council and Silver Institute numbers over the past two years, 2022 and 2023.

If you put a $2,000 gold price and a $25 silver price and looked at what World Gold Council Silver Institute have for investment, it comes out to about $128 billion went into gold and about $6 billion went into silver. So another way of looking at that is that if the central banks are, let’s say you’ve gotten 10% of that money that went into gold reallocate into silver, that’s $12.8 billion. So you’re tripling 12.8 plus the six that already went into silver, you’d be tripling the amount of silver for investment. Obviously, that would be at the same time where we continue to see the reports of the deficit when you factor in industrial, along with continued reports of a world going more green.

And anyway, that’s why I find this note about Russia so fascinating because this is at least the first indication publicly. Again, we do not know exactly what is happening privately, but those numbers could change quickly if we were to see governments and or central banks look at silver and start using it for the same purpose, which when you think about it, if certain groups are willing to shift their mindset on gold, would they be willing to do that on silver? We will keep you posted. So a few more notes about Russia that I came across while I was looking for more information about this.

Here we see Russia kirzig, we’ll go with kirzig for that. Fun to provide $40 million to build hydropower plant for Jeroi goldmine. So obviously, in the past 15 years, we’ve seen China do a lot of investment in terms of purchasing gold, but also in gold mines. Here, interesting comment from the chairman of the Sultanate of the Oman Shure Council. And he is talking, where is that key quote? Basically, he says that the country is opening up to foreign direct investment. We would like to increase it. Russia as a major market is very important to us, and we would like to step up the development of relations in all areas.

So again, you have another country that giving indications they’re headed towards the BRICS side of the trade equation rather than the West. We had Russian Central Bank repeat signal on monetary policy allowing for hiking at a key rate at the next meeting. Sorry, I always have this clock ticking in my head of trying to keep these videos moving, so sometimes I get ahead of myself. But with that said, the fact that inflation is still about 4% shows that we should have acted more decisively and tightened monetary policy earlier and faster. So while the West is in the midst of an increasing interest rate cutting cycle, Canada, U.S.

and others, ECB as well, the Russian Central Bank, hiking rates right now. And in case you’ve been wondering at all of how the Russian economy is doing, here we have another note. It was reported that Russia’s federal budget deficit expected to be 0.5% of GDP in 2025, 0.9% in 2026, so quite a bit lower than what we see in most places in the West. And one other note here. Today, Russian-Chinese relations have an unprecedented high level. Countries are actively cooperating in the political, trade, economic, scientific, technical, and many other fields. They’re effectively coordinating efforts in regional and global affairs for the sake of building a fair multipolar order, a lot of which does not come as a surprise, but just so you get an idea of some of the other news currently being reported between Russia and China.

Although in case you did not see this, let’s hear from Mr. Putin himself about him mentioning what will be happening at the upcoming meeting. Including within BRICS, we’re working on shaping an independent payment system free from political pressure, abuse, and external-sanctional interference. In this regard, I’d like to remind you that this year, BRICS was joined by new participants, that is Saudi Arabia, Iran, United Arab Emirates, Egypt, and Ethiopia. With this, the share of our association in global GDP has reached 36%, and the population of the planet, up to, has reached 45%. And BRICS has tremendous potential for joining of new participants and such strive of stakeholders from different continents.

So 36% of GDP, 35% of the world’s population, not talking about a small bit player at this point. And in terms of a few of the signs of evidence, I know a lot of them happen quickly sometimes, and I’ve been making a file and keeping some notes of some of the key transactions that show that it’s not just an idea they’re talking about, but implementing. And this is from that Jan Neuenhaus article that I talked about yesterday, that nations in the Enbridge project are stockpiling gold and driving up prices. And he had a great recap here of some of the different deals that have been done.

And let’s take a quick look. Here is PBOC and the Saudi Arabian Monetary Authority recently signed the bilateral currency swap agreement. And the agreement is valid for three years and can be renewed. This was back in 2023. Here’s something that came out recently with a meeting between Saudi Arabia and China, where Saudi Arabia said that it’s not necessarily their priority to do a Petro-Yuan, but they’re certainly open to it, and China being their largest oil customer currently. Here, Central Bank of the United Arab Emirates and the People’s Bank of China renewed currency swap agreement and signed the MOU to enhance collaboration on a central bank.

Digital currency development is also a deal with Brazil and, of course, that natural gas deal with France. So I do see these things happening, and it sure seems like they’ll be discussing more of that in the weeks ahead at the meeting. So a few final notes here in terms of life back in the West, where you have this article. Again, I mentioned yesterday, although I thought there was something I noticed later worth sharing. Here’s Powell talking on Monday in a conference, and he says, this is not a committee that feels like it’s in a hurry to cut rates quickly, which they were saying perhaps to give the impression don’t bank on 50 the next meeting, although it just seems a weird statement after you just cut 50 basis points while you said that there is no indication of an elevated probability of a recession or downturn in the economy.

Anyway, here are their economic projections that came out, and let’s see if we got, okay, there is our unemployment rate. Let’s take a look at the two-year. You see back last May, it was at 3.4 percent, has gone up to 4.2 percent, and we now have a port shipping strike, which we’ll highlight in just a moment, but their unemployment rate, they have it peaking at 4.4 percent, going back down to 4.3 percent in 2026. PC, they have inflation getting down to 2.2 percent next year and 2 percent the year after that, and the economy continuing to grow at 2 percent a year.

Keep in mind, those are some of the assumptions underpinning that. I’m not sure how likely those are. I would not bet on us being close to this combo in 2025 or especially 2026, but either case, you can see what was in the summary of economic projections. Then this last thing I want to mention, many of you may have seen this, but here is the longshoreman union president. This was a couple days before it happened, but in case you have not seen it, by all means, it’s a little bit out of my field of expertise, but certainly it does not sound good, so let’s hear what he had to say.

They want to get rid of him. Where’s the president of the United States? He’s not fighting for us. He told in LA, he told the union, hurry up and get a contract. That’s the mentality they have. They don’t even know what the hell they’re doing today. Well, I know what I’m doing. I’m going to save everybody’s job when it comes to the ILA and to all the unions around the world, because we’re going to fight with that alliance. I’ll shut them down throughout the world to prove that we can beat them. A little more of that candid conversation there by Harold.

And this was posted on the what is going on with shipping channel, and hopefully it’ll be okay with our host here. Let’s play a couple seconds of his recap of that statement. I get the president of the ILA. Container shipping lines fear Port Strike will paralyze half of US trade. This is a Bloomberg story over in G-Captain. If you start looking at the stats, it is pretty mind-boggling. This is from Mediterranean Shipping Company who put out a customer alert. They’re saying that this may not be resolved by September 30th deadline. That would delay the shipment of containers, both imports and exports on trucks and railroads through ports from Boston to Houston.

It goes on here in the advisory. Booking adjustments include… So, obviously, that doesn’t sound good. And that, unfortunately, here, play just a second of this, because it did not go well on the first day. And it did turn violent. I come here for seven years. I pulled the trash in. So, we will not leave that up there. We’ll leave this up here as we conclude. Certainly not a good thing to see happening right now. And perhaps, going back to these economic projections, everything was projected one way. There usually seems to be little room for error if you have a situation like this.

Similarly, when the health event happened four years ago, which is not funny at all. But when that happened, obviously, that changes things. So, I’ll leave that as my final comment there on the summary of economic projections. Hopefully, things stay peaceful as they try and figure out how things are going, but also could be an impact. So, want to keep your eyes out and open for that. With that said, going to wrap up. I hope you’re having a great afternoon out there. Appreciate you spending some time with us here. And we will see you again soon.

Thank you. [tr:trw].

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