In what is likely an unsurprising development, since the start of the Russia Ukraine conflict, Russians have become a major demand source for gold.
Overall, since bottoming out in March 2014 at around 5%, demand for gold among Russians has jumped to 11%. Given the likely continued trouble in the region, analysts do not expect any slowdown in the Russian demand acceleration.
Where's the money for the gold coming from?
Russians are dumping US Treasuries.
Since peaking in May 2012 at about 36%, Russian demand is now down about 20% Y/Y.
Total Russian holding of US Treasuries is now approaching the $100 billion threshold.
Here is what the two changes look like together.
As mentioned, the relationship is completely inversely related.
Overall, Russian demand for gold is set to expand in the near term, largely at the expense of US Treasuries.
