According to a new report by RAND Europe, in response to economic pressure from the West, Russia has turned to gold to support its economy, evade sanctions, and strengthen its international trade.

The report titled "Gold Rush: How Russia is using gold in wartime" shows that in the months leading up to the outbreak of the Russo Ukrainian war, Moscow, which relied heavily on oil and gas revenue, had turned to gold to support its economy. Since then, Russia's dependence on gold has further deepened.

Russia is the third largest gold producer in the world and now has a significant impact on international gold production. The report shows that Russian interest groups continue to have significant control over several important gold assets in Central Asia and Africa.

Since occupying and annexing Crimea in 2014, Russia seems to have gained more gold than any other country during the same period. Russia is one of the top five gold reserve countries in the world, with at least 2322 tons of gold reserves, making it the third largest gold producer in the world.

Although the exact quantity is not yet clear, a vault in Moscow is currently believed to have a large reserve. Formally speaking, these are used to balance the budget. Informally, Russia seems to be trading gold for hard currency, weapons, and foreign goods, opening up a new gold trade route between Russia, Africa, the Middle East, and China.

Although Russia seeks to become the world's most important gold producer, the report finds that its production may be slowing down. In history, most of the equipment in the gold industry was purchased from Western countries, but now the dependence on China is much higher.

John Kennedy, the research leader of the Rand European Defense and Security Program and the main author of this new report, said, "By February 2022, when Russia launched a full-scale attack on Ukraine, Russia had been acquiring gold at a faster rate than any other country for the past decade. Russia has one of the largest gold reserves in the world and plans to become the world's most important gold producer. Currently, Moscow is using gold to support its wartime economy and strengthen its access to key commodities, while having considerable influence on gold production in Central Asia and Africa

Kennedy added, "Gold is a key feature of Russia's mixed threat, and it is important for Western governments to recognize this when seeking to maintain pressure on Moscow

(Screenshot source: Rand)

This report investigates how Russia has been using gold since the Russo Ukrainian War in 2022. This report first outlines Russia's pre war gold policy and describes how it has changed since the beginning of the war. It discusses the financing methods of the gold industry, with a focus on the role of Russian banks and how Russian gold companies can respond to Western pressure and sanctions. The report describes the situation of Russian gold producers, including wartime productivity and supply of mining equipment. In addition, the report provides a detailed account of how Russia seeks to generate income from gold and develop its international gold trade. The report concludes with recommendations for further investigation.

important discovery

Since the invasion of Ukraine, gold has become a strategic resource for the Russian state. It affects Russia's revenue generating capacity and monetary policy; It is the core of Russia's international de dollarization movement; This is a major characteristic of Russia's involvement in African and Central Asian affairs; It played an important role in Russia's wartime trade relations.

Russia intends to become the world's largest gold producer, but there are signs that domestic gold production in Russia is stagnating. However, Russian interest groups hold significant stakes in the gold industry of the former Soviet Union and several African countries.

In the past decade, Russia has become the world's most important sovereign buyer of gold. In addition, Russia also holds an unknown (possibly considerable) amount of gold and gemstones.

Before attacking Ukraine, Russia converted all assets of its national welfare fund into Chinese yuan (60%) and gold (40%). In hindsight, this indicates that Russia is preparing to cope with the increasing economic pressure from the West.

Gold is Russia's most important revenue generating metal, but it is not and will not become a substitute for oil exports. The economic pressure from the West has also had a significant impact on Russia's gold mining industry, which is highly dependent on Western equipment and services.

6. Gold is crucial to Russia's most important wartime trade relations, especially with China, Türkiye, Iran and the United Arab Emirates. Russia has also been using gold as a means of payment for hard currency, weapons, and other commodities.

proposal

Further research is needed to determine the scale of Russia's international physical exchange activities.

2. Further research is needed on how participants in the Russian gold industry respond to Western sanctions and stricter supply chains, as well as where they seek to sell their gold. This is crucial for determining changes in the Russian gold industry.

Further research is needed on what Russia has gained from its overseas gold assets.

4. In depth exploration of this topic can explore to what extent Russia has acquired Western mining equipment.