Why Russia and Turkey Are Such Gold Bugs
Their moves out of U.S. debt and into the precious metal could be precursors of a bigger global shift.
Authoritarians like gold, too.
Photographer: Ulrich Baumgarten/Getty Images
Since December 2017, Russia has cut its holdings of U.S. foreign debt by more than half. Instead, it’s been increasing the share of gold in its international reserves. That’s understandable behavior for a country that has to deal with an unpredictable U.S. sanctions policy, but it’s also part of a trend. Foreign governments and international organizations account for a decreasing share of outstanding U.S. debt, and some economies have in recent years aggressively upped the share of gold in their reserves instead.
The Russian reduction of Treasury holdings, to $48.7 billion in April 2018 from $102.2 billion in December 2017, has been nothing short of dramatic, though it wasn’t a huge blow to the U.S. Russia’s holdings of American government bonds have long been dwarfed by those of China and Japan, as well as Brazil and some European countries. The U.S., with a debt of almost $21.2 trillion, can afford not to notice fluctuations in the tens of billions of dollars by an authoritarian state’s damage-control efforts and attempts to get away from the dollar.