Putin supports Russian central bank plan to double gold reserves

Section:

8p ET Tuesday, November 22, 2005

Dear Friend of GATA and Gold:

The Moscow Times story appended here has been
published with a wonderful photograph from the
Itar-Tass news agency showing President Vladimir
Putin holding a big gold bar at an exhibition
in Madagan in the Russian Far East. Just go to
the link contained in the story.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

President Supports Gold Plans

By Valeria Korchagina and Yuriy Humber
The Moscow Times
Wednesday, November 23, 2005

http://www.themoscowtimes.com/stories/2005/11/23/041.html

President Vladimir Putin on Tuesday said he backed the Central
Bank's plans to double its gold reserves, as the government set out
measures to boost the country's faltering gold industry.

"I support the proposal that the Central Bank pay greater attention
to precious metals in forming our gold and foreign exchange
reserves," Putin said, Interfax reported. Putin was speaking during
a stopover in Magadan, the capital of Russia's gold mining industry,
after a visit to Japan and South Korea.

Last week, the Central Bank said it was planning to raise the share
of gold in its reserves from 5 percent to 10 percent. In reaction to
the announcement, world gold prices reached an 18-year high on
Monday.

Natural Resources Minister Yury Trutnev, who accompanied Putin to
Asia, said that the country's annual gold output could hit 250 tons
by 2015, Interfax reported.

But this year gold production is set to drop by 3.1 percent, to 175
tons, and level off at about 160 tons per year through 2010,
according to the Union of Gold Producers. Russia is the world's
fifth-largest gold producer.

"Obviously, there is a gap between our potential and the real
situation," Putin said at a meeting with representatives of the
local gold industry.

The president said that the mineral extraction tax for gold fields
and other natural resources should be flexible to compensate for
differences in the quality and location of mines.

"We must discuss possible measures, including fiscal measures, [to
boost] the viability of developing remote fields. This concerns not
only gold, but other resources, including oil and gas," Putin said.

The government is working out a system to differentiate the rates of
the mineral extraction tax, Trutnev said, and will test it out on
the oil industry.

"If this model works in the oil sector, we can spread it further,"
Trutnev said.

The changes to the tax are not expected to kick in before 2007,
however.

Among other measures to help the gold industry, the government plans
to privatize its gold-processing firms and also allow miners to
directly sell processed gold abroad.

Russia currently exports 133 tons of gold per year, said Finance
Minister Alexei Kudrin, who was also accompanying Putin.

"Today, [gold-processing] enterprises don't need state support. We
are gradually putting them up for privatization," Kudrin said,
Interfax reported.

There are nine major gold-processing companies in Russia, four of
which are under state control, he said.

Kudrin said the government might also allow individual entrepreneurs
to mine gold. Currently, this kind of activity is forbidden and
qualified by the Criminal Code as a crime.

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