Russian Central Bank Considers Including Silver in Foreign Reserves

According to news reports published last week, the Russian government is considering spending 51 billion rubles ($535.5 million) over the next three years to replenish its precious metals reserves.

The reports stem from a line item in the government’s Draft Federal Budget, published on Sept 30. While gold has been an important asset in foreign reserves, the proposal indicates that the Russian government is looking to expand its holdings to include silver and platinum group metals.

The draft budget did not include details regarding a potential purchasing program; however, some analysts suggest that silver’s inclusion in foreign reserves could generate new investor interest, reestablishing it as an official monetary metal.

Central banks stopped accumulating silver in the mid-1850s, and the world moved off the silver standard by the early 1870s.

Some analysts point out that while silver remains an attractive monetary asset among retail investors, nations like Russia may be more interested in maintaining a strategic supply of the precious metal due to its industrial usage.

This year, there has been a strong push from producers to include silver on the U.S. and Canadian governments’ lists of critical metals.

Silver is a crucial precious metal in the alternative energy sector. According to the Silver Institute, industrial consumption of silver is expected to rise by 9% to 710.9 million ounces this year. The silver market is anticipated to experience its second-highest supply deficit on record, driven by demand from the solar sector, with silver demand for photovoltaic (PV) solar panels expected to increase by 20% to 232 million ounces.

Some analysts note that Russia’s involvement in palladium is unsurprising, as the nation is a major PGM producer. Last year, Russia produced 28% of the world’s platinum; however, its exports of palladium, platinum, and rhodium have been significantly impacted due to strict economic sanctions imposed by Western nations following its invasion of Ukraine in 2021.

Analysts suggest that, along with building a strategic stockpile, purchasing domestic PGM production will provide critical support for the mining industry. Russia had a stockpile of PGMs but sold it off in 2012.