Russia has a $140 billion gold reserve, but no one will buy it from them after they were banned from selling it worldwide.
- Russia has one of the world’s largest reserves, worth $140bn (£106bn).
- More than 2,000 tons of gold are stored in vaults in Moscow and St. Petersburg
- Putin beefed up reserves after Crimea invasion, anticipating costly sanctions
- But US and EU bans mean Russia’s central bank can’t trade its huge holdings.
Russia’s $140 billion gold reserves could be sold at bargain prices after Western sanctions halted its trading on the open market.
The country ranks fifth in the world in terms of gold reserves: more than 2,300 tons of gold are stored in the vaults of the Bank of Russia in Moscow and St. Petersburg.
Vladimir Putin increased Russia’s gold reserves after the 2014 invasion of Crimea to protect Moscow from the burden of global sanctions.
But new restrictions from the US, EU and other countries prevent Russia’s central bank from doing business with the West.
The price of gold has risen steadily as investors abandon rubles and bet on the precious metal.
Russia has one of the largest gold reserves in the world, but now it will be difficult for it to sell it abroad.
Global traders and banks, who usually buy Russian bullion in exchange for currency, now fear a bad reputation or direct financial sanctions for doing business with Russia.
This means cutting off one of Russia’s most valuable avenues to economic security, and it seems to be working.
“That’s why they bought their gold, precisely because of this situation,” Fergal O’Connor, professor of business at Cork University, told Bloomberg.
“But if no one will trade it with you, it doesn’t matter.
Instead, Russia could be forced to sell more than £100bn of its previously lucrative holdings to Indian and Chinese central banks.
These deals will be completed at a lower price, commodity analysts at CPM Group predict.
And the blow to Russia could be even worse if Western politicians expand so-called “secondary sanctions” to punish those who buy or sell Russian gold anywhere, including in China’s key market.
Earlier this month, the London Bullion Market Association’s city trading floor – the most important in the world – banned all gold bars produced in Russia.
Russians are buying gold as a reliable alternative to the collapsed ruble, allowing domestic prices to remain stable.
Abroad, however, Russia’s once-reliable gold reserves remain in the shadows.