Why Putin is buying so much gold

Russian President Vladimir Putin is developing a taste for gold (CEC:Commodities Exchange Centre: @GC.1).

With all of its income from selling oil (Intercontinental Exchange Europe: @LCO.1), Russia is diversifying its reserves by buying massive amounts of gold, said William Rhind, CEO of the World Gold Trust Services.

Of all the central banks that make their reserve actions public, Russia has been the "largest, most active" gold accumulator, he explained. Still, Rhind said, the "elephant in the room" is how much gold China is buying, as Beijing does not publish these figures.

A recent report from the World Gold Council showed that many central banks, including Russia's , have beefed up their gold reserves. This investment, the report suggested, was "driven by a number of factors including a continued diversification away from the U.S. dollar and the backdrop of ongoing geopolitical tensions."

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Still, Rhind explained that the move towards gold buying does not represent a new trend for global currencies.

"I don't think it's moving to a de facto gold standard, it's just simply about diversification," he said. "In many ways they view it as being not too dissimilar from why anybody would own gold."

More than half of all the gold added to central bank reserve assets in the third quarter was purchased by Russia (55 of about 96 metric tons), the World Gold Council report said.

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In total, Russia's central bank has bought about 150 metric tons of gold so far this year, Bank of Russia Chairwoman Elvira Nabiullina said on Tuesday .