Gold one of Russia's most important exports after oil and gas
In recent years, the Russian central bank has significantly increased Russia's gold reserves. The World Gold Council estimates Russia's gold reserves at around 2,300 tons. In addition, Russia mines about 330 tons of gold per year, making it the world's second-largest gold producer after China.
In 2020, Russia exported gold for about $19 billion. The import ban could cause the Kremlin to lose this income. At least the West hopes so.
Will a gold embargo affect the gold price?
Experts hardly expect a gold embargo to have a major impact on the gold price. Since gold is traded globally, there is no need to fear a gold shortage on the world market. The rumored Russian exports of $19 billion would be just a drop in the bucket, given the daily trading volume of $140 billion.
Because British, EU and US institutions have not been allowed to do business with the Russian central bank since March, Russian gold is already excluded from trading on the most important wholesale exchanges. In addition, two-thirds of the demand for physical gold comes from China and India anyway, which are known not to participate in sanctions against Russia. Russian mine gold can then be further processed in refineries and affineries in these countries and then traded on as unsuspicious goods. In addition, the boycott only applies to new gold from Russia. Gold bars that were already in circulation before the Russian aggression may continue to be traded.
The global gold market cannot be regulated
The gold embargo is therefore likely to have more of a symbolic effect. In fact, it also means that the global gold trade cannot simply be regulated by individual countries. Gold is and remains much more independent of state intervention than currencies and other investments. This is because even in times of gold bans, it became apparent that such ownership prohibitions were always very difficult to enforce. Many citizens preferred to hide their gold rather than turn it in to official authorities, and trade in gold and silver flourished even when it was banned.
If you also want to protect your assets with gold, we strongly advise you to buy physical gold in the form of gold coins and gold bars. It is recommended to buy gold anonymously. In Austria it is currently possible to trade gold up to 9,999 euros completely anonymously, in Germany and other EU countries this anonymity limit is already significantly lower.
