Russia is benefitting from its increased gold reserves, which reached a two-decade high at the end of last year, the Izvestia newspaper reported on Thursday, citing data from the World Gold Council.
Statistics showed that Russia had 2,332 tons in global gold reserves as of the end of 2022, putting it fifth in the international rankings. Only the US, Germany, Italy, and France had greater reserves. According to the Russian central bank, the country’s forex reserves amounted to $581.6 billion as of the start of September 2023, including $144.7 billion in monetary gold.
Russia’s foreign exchange reserves reached a record $643.2 billion shortly before the conflict with Ukraine broke out in February of last year. Roughly half of those funds were reportedly frozen by Western central banks in early March 2022 as part of sanctions related to the conflict. The remaining holdings consist of gold and foreign currency kept within the country, as well as Chinese yuan assets. Moscow has called the freezing of its assets “theft” and has warned that it contravenes international law.
Geopolitical tensions between Russia and the West have prompted an overhaul of foreign currency exposure by numerous national regulators, Finam Financial Group analyst Aleksandr Potavin told Izvestia. Storing reserves in so-called safe haven assets, such as gold, reduces the likelihood of their depreciation, seizure, and other problems, he explained.
“The purposeful creation of significant reserves in the precious metal means that the country does not spend a large amount of money on its development, but is salting it away. Quite often, governments do this when they see growing geopolitical risks,” the expert said.
According to Freedom Finance Global analyst Vladimir Chernov, the possible introduction of a precious metals-backed single currency by the BRICS countries could be another reason behind Russia’s stockpiling of gold reserves.
The price of gold has risen by around 8% since the beginning of the year. The precious metal was trading at $1,946 per ounce on Friday, up from $1,800 at the end of 2022.
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