Russian oil funds set to invest in gold
Posted on 28 June 2008 with no comments from readers
Russian state oil funds are preparing to invest in gold for the first time, according to a report in The Moscow Times today citing a senior Finance Ministry official.
Deputy Chief of the ministry’s international finance department Pytor Kazakevich said that gold funds were not interested in precious stones and alternative investments: ‘But gold, why not?’
The Russian State has a long history as an investor in precious metals, and has one of the world’s greatest collections of jewellery and artefacts in the Kremlin. Even in Stalin’s time be-jewelled gold and silver items were added to the collection as part of the national foreign exchange reserves.
With oil past $140 a barrel this month Russian oil funds are overflowing with cash for investment. The commodities boom is leading to many investments, for example the $1.25 billion purchase of US steelmaker Esmark by Severstal last week after winning a competitive bid.
It is not clear when and how much gold Russian oil funds will buy. However, the obvious logic expressed by Mr Kazakevich is clear: buying assets that are rising in value in a commodities boom makes sense for any diversified fund.
Gold looks to be heading back to $1,000 an ounce and could well have $1,200 in its sights. After all funds will not have failed to notice that as global stock markets plunged last week the yellow metal closed sharply up.
