Cracking Down on Russia’s Ability to Sell Gold

As Vladimir Putin’s brutal war against Ukraine entered its second month, Group of Seven leaders agreed to tighten the economic vice around Moscow, including trying to prevent Russia from utilizing its massive reserves of gold. 

“We need to do more, and so we need to do more economically. Can we do more to stop him [Putin] using his gold reserves, for instance, in addition to his cash reserves?” said British Prime Minister Boris Johnson. “The more pressure we apply now, particularly on things like gold, I believe the more we can shorten the war.”

The strategy agreed to by G7 leaders meeting at NATO headquarters in Brussels is to limit Russia’s ability to sell its gold reserves by forbidding transactions with the Russian central bank.

The White House announced that existing sanctions that limit financial  dealings with Russia specifically include “any transactions involving gold related to the Central Ban of the Russian Federation.”

Russia holds more than 2,000 metric tons of gold, which is worth about $140 billion, according to the World Gold Council. 

The effort comes weeks after Western leaders agreed to freeze Russia’s foreign currency funds stashed in banks around the globe, which, according to Russia’s finance minister caused the country to lose access to half its reserves.

Precious metals markets in London and New York had already banned transactions in Russian gold.  But it remains to be seen whether the two largest gold consumers in the world, China and India, will still transact with the Russians, particularly since both nations have refrained from criticizing Moscow since the outset of the attack on Ukraine.