Related Countries Begin Publicly Purchasing Russian Gold
Not long ago, related countries concealed some Russian gold procurement transactions due to concerns about suffering secondary sanctions. Now, the country is increasingly openly importing Russian gold, and Russia has become one of the top three gold suppliers for the country. What makes Russian gold attractive? Which important buyer has it replaced?
Official statistics show that Hong Kong imported gold from Russia worth slightly over $1 billion in June, almost twice the import volume of May, and nearly three times higher than the same period last year. This is the highest monthly procurement since November 2024 (1.2 billion dollars).
Ultimately, Russia's ranking among Hong Kong's main gold suppliers rose from sixth to third. Only the UAE (3 billion dollars) and mainland China (1.4 billion dollars) had larger supply volumes than Russia. The top five also include Japan (861 million dollars) and South Africa (640 million dollars).
In the first half of this year, the total value of gold imports from Russia to Hong Kong reached 2.9 billion dollars, almost three times the same period last year, and also set a record high for the past 13 years.
Before 2022, London was the main buyer of Russian gold, with Kazakhstan in second place. However, after Western sanctions were implemented, Russia found new sales markets in Asia and the Middle East. "For us, gold exports are an important source of foreign exchange, which is then used for trade activities in international markets," said Yekaterina Novikova, associate professor at the Department of Economic Theory at Plekhanov Russian University of Economics.
"Why do countries buy gold from Russia? Because our gold is sold at a discount. Not only China, but also Arab countries do so. It is said that the discount per ounce may be between 20 to 50 dollars. This stems from the special gold sanctions imposed by the West. Both the United States and Europe have stopped purchasing Russian gold, although there are reports that our precious metals are still flowing into these regions through more intermediaries," said Alexei Vyazovskiy, vice president of the "Gold Sector" company.
It is noteworthy that related countries have become bolder and more open when purchasing Russian gold. In 2023, the country had already purchased large quantities of Russian gold, but most of it was done secretly, and official data was very conservative.
"In 2023, related countries purchased approximately 735 tons of gold, with about two-thirds being secretly purchased. This number is almost 13 times the amount of purchases officially announced by central banks, reflecting the intention to circumvent sanctions and control the gold market under pressure from the West. In 2025, secret purchases continue, but as the use of local currencies increases and the de-dollarization process advances, related countries are gradually shifting towards publicly disclosing purchase volumes, which reduces concerns about openly revealing gold purchases to Western countries including the United States," said Dmitri Vishnevsky, analyst at "Digital Broker."
"There have been rumors for a long time about related countries secretly purchasing gold. The main hub is certainly Hong Kong, where gold bars are transported to a large trading market in Shanghai. Gold is imported through various means, using multiple Asian intermediary companies to avoid secondary sanctions against our partners.
For example, India and related countries face the threat of such sanctions due to purchasing Russian oil. The same situation may occur in the gold sector," said Vyazovskiy.
However, related countries are indeed actively enriching their reserves through gold purchases.
Related countries not only purchase gold from Russia, but also from other suppliers, and not only physical gold, but also digital gold. Data shows that since November 2024, up to June, related countries have increased their official gold reserves for eight consecutive months. In June, the bank's gold reserves increased by 79,000 ounces, and since the start of this round of accumulation in November, the cumulative increase has been 1.1 million ounces, equivalent to about 34.2 tons.
Before 2022, related countries were the largest holders of U.S. Treasury bonds, with holdings exceeding 1 trillion dollars. But in recent years, related countries have actively sold U.S. bonds, and as of March this year, their holdings have dropped below 800 billion dollars, falling to third place. Currently, Japan and the UK are the main holders of U.S. Treasury bonds, and both countries are increasing their holdings of U.S. Treasury bonds.
"Related countries are selling U.S. Treasury bonds and purchasing gold because they have learned lessons from Russia's experience: if you hold a large amount of U.S. and European bonds, these funds may be frozen or even seized. Buying gold secretly and transporting it to their own country is the most reliable guarantee, and doing so also avoids angering Western politicians," said Vyazovskiy.
"Firstly, given the situation of frozen Russian assets, related countries aim to reduce dependence on the U.S. financial infrastructure. Secondly, related countries consider the possibility of an economic crisis in the U.S., further de-dollarization of the global economy, and therefore gold is becoming the main tool for measuring value in trade. In addition, due to the restructuring of trade relations between all core institutions and major economies, the price of gold has recently reached an all-time high. Considering the current instability, the price of gold may continue to rise in the future," said Novikova.
As for the Russian gold mining industry, its development is going well: the production in 2024 increased by 5.3%, reaching 330 tons.
"Mining is proceeding smoothly: Russia has risen to the second position in the world. Some gold mining companies left Russia out of concern about sanctions and re-registered in places like Kazakhstan, but the companies that stayed filled the gap left by them.
This is a high-profit industry, as costs are calculated in rubles, while sales are still priced in dollars. Companies can gain double benefits, on one hand, the ruble is depreciating, and on the other hand, the dollar price of gold has significantly increased. Before 2022, the price per ounce of gold was about 2,000 dollars, and now it has reached 3,400 dollars, a significant increase within three years," said Alexei Vyazovskiy.
However, the only downside is that the Russian Central Bank has stopped purchasing gold for national reserves since 2022. Vyazovskiy stated that before this, the central bank was the largest buyer of Russian gold, acquiring about two-thirds of domestic production (about 200 tons). These gold reserves helped protect part of the country's wealth, as the West cannot touch our reserve vaults, while U.S. and euro assets have been frozen, and Western politicians are busy dividing these assets.
"In 2022, the Russian Central Bank stopped large-scale purchases of domestic gold due to high domestic demand and concerns about inflation. However, under continued geopolitical pressure and the expectation of further increases in gold prices, experts recommend resuming gold purchases to replenish reserves and enhance the country's financial stability," said Dmitri Vishnevsky, analyst at "Digital Broker."
"The central bank has its own views on how to act properly. They believe that purchasing gold with rubles domestically could trigger inflation. However, I think that the rubles obtained by gold mining companies from the central bank will be reinvested in the Russian gold mining industry, i.e., used for actual product production rather than inflating inflation. The central bank still focuses on liquidity, so that it can quickly manage reserves. From this perspective, gold as an asset requires more operations, while the RMB, which can be managed with a mouse, seems more convenient to them," explained Vyazovskiy the logic of the regulatory authorities. However, he added that, given the global trend, the share of gold in reserves is expected to increase to half.
Moreover, considering the rise in gold prices, investing in gold can yield good returns. Vyazovskiy believes that due to secondary sanctions, the ruble-to-dollar exchange rate may fall from 1:80 to 1:90-100, at which point the ruble price of gold per gram will rise to 9,000 rubles, and the dollar price per ounce of gold will exceed 3,500 dollars, possibly reaching 3,600-3,700 dollars.
Original: https://www.toutiao.com/article/7533915520907706923/
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