MOSCOW – Russia is able to withstand a sharp drop in oil prices with the help of the country’s gold reserve, said Russian Finance Minister Anton Siluanov.
The Russian economy is largely related to the extraction and processing of oil. Of course, low oil prices would affect the economic development of the country. That is why Russia intends to reduce the dependence of world prices on energy resources.
He explained in an interview with US channel CNBC that regardless of what happens with prices, Russia will have the funds to meet their obligations since they have accumulated large gold reserves, more than 7% of GDP.
The minister said that even a fall in oil prices from $30 or $20 per barrel would not disturb the Russian budget during the first three years.
However, Russia is interested in making oil prices stable and predictable, Siluanov said.
In early October, the Russian Ministry of Finance revealed how much the country would lose in case of a drastic fall in the price of oil.
The Bank of Russia bought more gold in the first quarter of 2019 than any other country.
On the same network earlier this month, economic strategist David Roche, explained that given the policies of the world’s central banks, people will look for an alternative currency, and gold could be a good option
He explained that gold is a good alternative currency because it is safe and because it costs nothing to own it compared to paying negative deposit rates.
In this context, gold prices could rise around 30% to reach $2,000 per ounce next year, Roche forecasted.
Roche’s comments come after the measures taken by the main central banks. The US Federal Reserve reduced its reference interest rate to a range of 1.75% to 2%. The European Central Bank also tightened the rate to -0.5% and launched a new bond purchase program.