Alexandre Manzyuk/Reuters

  • The fifth largest stock of gold in the world belongs to Russia, valued at nearly $140 billion.

  • As with oil, the sanctions make it very difficult for Russia to trade in the precious commodity.

  • Demand for gold is still high in the country, with the ruble hitting record highs.

Like the price of crude oil, gold prices have skyrocketed since Russia began its invasion of Ukraine.

And like oil, Russia holds some of the largest gold reserves in the world – some 2,300 tonnes, worth nearly $140 billion.

The huge reserves of the precious metal were accumulated over the past decade and a half and were intended to be a kind of economic insurance policy for the country.

But as with oil, the sanctions make it incredibly difficult for Russia to truly realize the value of its holdings.

“That’s why they bought their gold, it was for a situation like this,” Fergal O’Connor, a professor at Cork University Business School, told Bloomberg. “But if no one wants to trade it with you, it doesn’t matter.”

Last week, the London gold market – the world’s most important center for bullion – banned all bullion from Russian refineries, excluding them from global trade.

A machine engraves information on a 99.99% pure gold bar at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk

Ilya Naymushin/Reuters

The US Senate followed up this decision with a new bill prohibiting US citizens from carrying out any transactions involving Russian gold.

“Russia’s massive supply of gold is one of the few remaining assets that Putin can use to keep his country’s economy from falling even further,” Maine Sen. Angus King said in a statement. “By sanctioning these reservations, we will further insulate Russia from the global economy and increase the difficulty of Putin’s increasingly costly military campaign.”

Even without international buyers, domestic demand for gold appears to be high, according to a statement from Russia’s central bank.

On Tuesday, the bank said it would suspend its regular purchases of gold from lending institutions so as not to compete with household demand at a time when people are rushing to exchange rubles for gold bullion.

An employee processes 99.99% pure gold bars at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk

Alexandre Manzyuk/Reuters

If the currency continues to fall against the U.S. dollar, Credit Suisse strategist Zoltan Pozsar told Bloomberg that the country could use the stock to effectively return to a gold standard, using it as a “point of anchor” by selling it at a fixed price in rubles.

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