On Thursday, the Izvestia newspaper reported that according to data from the World Gold Council, Russia has been enjoying the benefits of its enlarging gold reserves, which hit a 20-year high at the end of 2022.
As of the end of 2022, data shows that Russia had 2,332 tons in global gold reserves, leaving it in fifth place in the international rankings. The only nations with more gold reserves were the United States, Germany, Italy, and France. Russia’s forex reserves sat at $581.6 billion as of the beginning of September 2023, which included $144.7 billion in monetary gold, according to data from the Russian central bank.
By the period shortly before the onset of the military action in Ukraine in February of last year, Russia’s foreign exchange reserves hit a record $643.2 billion. About half of those funds were frozen in early March by Wester central banks as a result of Western sanctions imposed in response to the conflict. The remaining reserves consisted of gold and foreign currency held within the nation, as well as assets in Chinese yuan. Moscow, for its part, has noted the seizure of its assets is “theft” and was done in violation of international law.
Finam Financial Group analyst Aleksandr Potavin told Izvestia the the geopolitical conflict between Russia and the West has prompted numerous national regulators to overhaul their own foreign currency exposure. He explained that storing reserves in what are called safe-haven assets, such as gold, reduces the chances of their depreciation, seizure, or other issues which could arise with them.
He went on to say, “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.”
Freedom Finance Global analyst Vladimir Chernov noted that another potential reason explaining Russia’s stockpiling of gold reserves might be the possible introduction of a single currency by the BRICS nations, backed by precious metals.
The price of gold has risen by roughly 8%, since the start of the year. On Friday, the precious metal was trading at $1,946 per ounce, up from $1,800 at the end of 2022.
