According to a new report from Bloomberg, Russia has become the world's biggest buyer of gold under the leadership of Vladimir Putin.
Over the last decade -- during which Putin was perennially in a position of power, serving as both president and prime minister -- Russia's Central Bank added 570 metric tons of gold, or about 1.25 million pounds. According to Bloomberg, that's about 25 percent more than China has added over the same time period. The report adds that the gold bullion acquired by the Central Bank weighs as much as three Statues of Liberty.
So what motivated the Russian president to become the real-life version of Bond villain Auric Goldfinger?
While the fictional criminal genius had a devious plot to enrich the value of his gold stockpile by irradiating the gold in Fort Knox, Russia needed no such villainy to make its gold more valuable: Over the past decade, economic forces have conspired to cause gold prices (GC) to increase by around 400%. Quantitative easing and economic uncertainty in the wake of the global downturn have fueled a gold rush by skittish investors, sending the price sky-high. And that's made Putin look like a genius for beginning the gold-buying policy in 2005.
One Russian lawmaker, Evgeny Fedorov, laid out the strategy in simple terms.
"The more gold a country has, the more sovereignty it will have if there's a cataclysm with the dollar, the euro, the pound or any other reserve currency," he said in a phone interview with Bloomberg.
Despite Russia's gold binge, it's still far from the biggest owner of gold. The country's current stockpile of 958 tons is good for only eighth in the world; the U.S. ranks first with 8,134 tons of gold, more than twice as much as runner-up France.
Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.
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