Clear advantage for Russia

Russia’s total gold reserves are still lower than those of the Federal Republic of Germany. However, Russia stores more gold reserves on its own soil than the Germans do.

By Lars Schall

Russia currently holds about 2298.5 tons of gold, Germany holds about 3,300 tons of gold. Therefore, one would think that Germany would have a clear advantage. But this assumption is a mistake.

The one major advantage that gold has over all other financial assets – no counterpart risk – is only given if it is physically in one’s own possession, i.e. if it is available to one without restriction at any time. Germany stores about 49 percent of its gold reserves in New York City and in London. Conversely, this means that only half of the total of around 3,300 tons is located on German soil – and is therefore not subject to any counterpart risk. Russia stores 100 percent of its gold reserves at home (2/3 in Moscow, 1/3 in St. Petersburg). (1) Accordingly, Russia may still possess less gold than Germany, with just under 2,300 tons, all in all; nevertheless, it has a clear advantage in comparison to the Germans when it comes to counterpart risk.

Already some time ago I talked about this issue with the Dutch gold market analyst Jan Nieuwenhuijs (formerly known under the alias Koos Jansen):

LS: However, the Germans intend to leave roughly half their gold position in New York and London. This is now the official position of the Bundesbank that they want to leave it there so they are able to react to a real currency crisis if that happens. Do you have to have the gold in London and in New York for such a purpose?

JN: I would say no. I mean, if there would be a currency crisis, people would rush to gold and your gold would become more valuable and you would like to have it at home, not in England or New York. Only if there was a crisis and you want to sell gold, you would like to have gold in London, but how I look at it, I think it’s better with economic turmoil up ahead to have your gold at home than in England.

LS: Yes, and the IMF says that gold, monetary gold, physical bullion gold is the only financial asset with no counterparty risk.

JN: Yes, with no counterparty risk. This was stated in the balance payments manual number six. Yeah, yeah. I think those things are really significant and, you know.

LS: Yes, but in order to be such a financial asset, you really have it in your own possession, on your own soil, right?

JN: You’re absolutely right. If you talk about gold and gold is the only asset with no counterparty risk, you’d need it at home and of course it does have a counterparty risk if it’s in London or in New York. It’s as simple as that. Yeah, you’re right. (2)

By the way, in 2010, U.S. gold market analyst James Rickards told me during an interview regarding gold: „My estimate is that Russia needs to acquire over 1.000 tonnes … in order to achieve a gold parity with the United States of America.“ (3) Well, in 2011, the Russian central bank held circa 850 tons of gold. (4) And now that Russia has about 2298.5 tons of gold, we can probably say: Mission Accomplished.


(1) Vgl. “Bank of Russia Gold Storage“ unter: “Bank of Russia“, BullionStar;

(2) Lars Schall: “China understands the Bullion game“, GoldSwitzerland;

(3) Cf. Lars Schall: “The central banks don’t consider it manipulation, they consider it part of their job“, Interview with James G. Rickards,, December 12, 2010;

(4) Cf. Russia Sells Gold as World Prices Rise. The New York Times, July 7, 2011;

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