Russians are buying more gold as the Rouble depreciates. Bankers say sales have tripled over the last month and that it may not yield much profit. But in the face of economic collapse its taking on a new lustre.

The Russian Rouble fell 14% against the dollar this year, and the currency market is likely to remain highly volatile. Deputy Chairman of Absolut Bank, Oleg Skvortsov, says this is leading many Russians to turn to a more traditional investment – gold.

“Russians won’t return to the stock market any time soon. The situation in real estate is also not that bright. This leaves only two investment opportunities – deposits and precious metals. The demand for gold will double next year but I don’t think its share will be more than 1% from the overall deposits in the Russian banks.”

The price of gold reached a record $1000 per ounce last March, since then it has eased off during the middle part of the year, but in the lead up to Christmas was still fetching just under $850 per ounce – with the dollar far stronger than it was in March. It has easily outperformed all other precious metals since early October, including platinum and silver, and as almost every other investment class has taken a battering, its held up surprisingly well.

But Uralsib Analyst, Nikolay Sosnovsky, is unwilling to speculate how long gold may stay at this level.

“It's hard to say what one factor supports the price of gold. It can be investors expectations that gold will go up amid negative forecasts for the economy in general, or that there's a bubble that all commodites have – one which hasn't blown over for gold yet.”

Bankers say the peak of demand for the metal was in October when Russians withdraw 6% of overall deposits, transferring some of them into gold.

Demand remains strong largely due to the raft of fiscal stimulus packages and interest rate cuts which governments around the world have implemented in response to the global financial crisis. Their immediate focus is to ward off the threat of deflation, but many are seeing the potential for greater long term inflation as a consequence. Famous British Economist J.M. Keynes once described gold as a ‘barbaric relic.’ But in uncertain economic times, with volatile currencies incapable of offering safety, its taking on a lustre for more investors once again.