LONDON (TheStreet) -- Russia has gone on a gold-buying binge this year, but the move has done nothing to shore up the country's embattled currency, the ruble. And contrary to speculation, Russia will continue to buy gold through 2015.
Gold Hungry Russia and the Weak Ruble
Russia has been the world's biggest buyer of gold in 2014, adding 150 metric tons to its hoard and catapulting its holdings into the top five among nations. It stands at just shy of 1,170 metric tons, worth about $45 billion at today's prices. Russia now has its largest hoard since the last Romanov Tsar topped 1,200 tons, right before the outbreak of World War I.
Yet the ruble has plummeted -- an inconvenient fact for hard-money fans in the West who think central-bank gold buying is a mark of strong monetary policy. This week, the ruble closed near 70 to the dollar. It usually trades around 32.
Further, Russia has long been an aggressive buyer of gold. It was late in 2005 when President Vladimir Putin publicly approved a plan from the Central Bank of Russia to double national gold holdings. He set the target at 10% of total reserves by value, a level not seen since the 1998 ruble crisis. This policy is part of Putin's economic and political strategy. Gold is touted in Russia as a symbol of the country's power internationally. Since 2005, Russia has been among the biggest buyers of gold each year, especially in 2009 and 2010. In May 2010 alone, Russia bought about 34 tons of gold.