In just the past month, three EEU nations have embarked upon a process of dumping dollars, with two of them also increasing their gold holdings in preparation for a post-dollar world.
Earlier in June we discovered that last month’s climb of the 10 year Treasury yield to over 3% was primarily due to Russia selling $49 billion of their dollar reserves. Then just a few weeks later Belarus announced they were signing up with Russia to begin bi-lateral trade done outside the reserve currency.
Now on June 20th a 3rd Eurasian Economic Union (EEU) member has jumped into the mix by announcing their were dumping both their dollar and yuan reserves to instead purchase physical gold as their primary monetary protection.
China’s neighbor Kyrgyzstan has been piling up gold reserves as a hedge against a possible trade war between Beijing and Washington.
The country is seeking to boost the share of gold in its $2-billion international reserves to 50 percent from its current 16 percent.
“The rules of the game are changing,” Kyrgyz Central Bank Governor Tolkunbek Abdygulov told Bloomberg in an interview. “It doesn’t matter what currencies we have in our reserves; dollars, yuan or rubles all make us vulnerable.”
The Kyrgyz currency, the som, slumped to a record low in 2015 following steep depreciation of the Russian ruble amid an oil crisis and stand-off with the West. Since then, the country boosted the share of gold in its reserves from 8 to 15 percent.