Global InterGold asks: how has ruble's plunge helped supported gold production in Russia?

2015 is the year which will make history in Russia's gold mining. The crashing ruble, among other external factors, has had its perks in the profitability of this activity. How has it influenced gold mining and what impact will it have worldwide?

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The sanctions in Russia by USA and the European Union started an economic war that left Russia out on a limb. This somehow has forced the Eurasiatic country to find an alternative way to secure the economy of the country the most well-known of which has been the purchase of gold and increase its gold reserves.

By buying gold Russia has diversified its international reserves away from dollars, euros and other foreign currencies. The main purchases are to national gold mining companies to support the economy, and they seem to benefit from the ruble's plunge.

Even though the price of gold has been slightly increasing since the beginning of the year due to its growing demand by central bank, according to BSC Financial Group, the weakness of the ruble lowered gold mining costs to the minimum at an international level – 15% lower than the average, which is equivalent to approximately $740 per ounce.

The head of equity research at BSC Financial Group declared in a recent interview that gold production could reach a world record in terms of margins, and its costs might decline 25 percent during the rest of the year. In spite of the positive expectations for 2015, experts who look ahead doubt the margins will remain at the same high level in years to come.

Production in the Russian Federation increased last year about 8 percent, that is, $12.5 billion, which turned Russia the second-largest producer, and the even lower costs in 2015 can increase 3 percent the production. Already in February the production reached 300 tons.

This fat year in gold mining will increase the gold output worldwide, and Russian companies are determined to make hay while the sun shines, although it might be affected by high inflation in the country. Hence the future of the sanctions and the ruble will determine the future situation.

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