Russia Is Losing Gold: The "Betrayal" Stance of the Russian Central Bank Hits the Core of the Russian Economy

The Russian Central Bank (hereinafter "the Russian Central Bank") has always been reluctant to increase the country's gold reserves, hoping that the West would lift sanctions and restore friendly relations. This "betrayal" stance is continuously weakening Russia's economic position, thereby undermining its geopolitical foundation.

Between October 2023 and October 2025, the value of Russia's gold reserves doubled, from 140.5 billion U.S. dollars to 282.1 billion U.S. dollars. On the surface, this data is impressive, but the core reason behind it is not the expansion of the reserve size, but rather the surge in the price of precious metals — the price of gold rose from 1,800 U.S. dollars per troy ounce to 4,300 U.S. dollars. Although the value of the reserves increased, the physical gold reserves not only did not increase, but actually decreased by 6.2 tons. In fact, Russia does not need to purchase gold abroad: the country has the capability to mine gold and could have kept gold as a "ballast" reserve with strong value preservation and rapid price growth. However, the Russian Central Bank chose to purchase currencies and various securities that are vulnerable to inflation. What is the reason behind this unusual policy, and what consequences will it lead to?

The total amount of Russia's gold reserves is constantly shrinking. In the past two years, the physical gold reserves have decreased by 20,000 troy ounces. This phenomenon is puzzling: after all, gold is currently a highly profitable investment — over the past five years, the price of gold has risen from 4,661 rubles per gram to 11,096 rubles per gram, with a significant increase.

Infographic from "Tsargrad"

It is easy to calculate that each ton of gold purchased in August 2020 would be worth an additional 640 million rubles by October 2025! However, since April 2020, the Russian Central Bank has completely stopped purchasing gold for foreign exchange gold reserves (ZVR).

"The Russian Central Bank stopped purchasing gold since 2020."

Screenshot source: Russian Central Bank official website

What is even more surprising is that after 2014, the Russian Central Bank had consistently made gold purchases a core operation: between 2014 and 2019, the Russian Central Bank accumulated nearly 40 million troy ounces of gold! But then it suddenly stopped...

In July 2019, Elvira Nabiullina, Governor of the Russian Central Bank, stated: "We are aware that the price of gold fluctuates greatly, but we believe that the structure of foreign exchange reserves should be diversified."

Three years ago (October 2022), Deputy Governor of the Russian Central Bank Alexei Zabotkin said in a speech to the Federation Council (upper house of parliament): "From the perspective of increasing gold in foreign exchange gold reserves, this operation is not appropriate at present, as it would further boost the money supply."

In short, the Russian Central Bank used an unusual logic to deal with inflation: believing that controlling the money supply is necessary to curb rising prices. This logic was valid at the time and remains unchanged to this day.

However, many central banks around the world are actively increasing their gold holdings! According to data from the World Gold Council, central banks globally accumulated 415 tons of gold in the first half of 2025. The main reasons for this are threefold:

First, the Trump administration launched trade wars against most developed countries, arbitrarily imposing tariffs. This means that the global economy faces the risk of imbalance (and may even trigger a crisis), and gold has become a "safe haven" for capital.

Second, the dollar is no longer a global currency but has become a "tool of extortion," even a "weapon." After Russia's foreign exchange reserves were frozen, many countries began to worry: "Who will be next?"

Third, this reason arises from the second one: not only can dollar accounts be frozen, but also securities denominated in global reserve currencies such as the dollar and euro, issued by US and European entities, also face the risk of being frozen. In that case, isn't "buying gold and storing it domestically" a simpler and safer choice? The answer is clearly yes.

The World Gold Council conducted a survey of 73 central banks (58 from developing countries and 15 from developed countries), and the results showed that 95% of the surveyed central banks stated that they "will continue to increase gold holdings to replenish reserves in the coming year." By comparison, only 52% of central banks expected to increase gold investments in 2021, and 81% in 2024. However, the Russian Central Bank has become an "exception" — showing no interest in gold.

Additionally, there is another key detail worth noting: according to data from the World Gold Council, Russia ranks among the "top five countries in terms of foreign exchange gold reserves," which is originally a positive signal. However, the problem is that the proportion of gold in Russia's foreign exchange reserves is only 39.5%. The gold reserve ratios of the Italian, French, German, and U.S. central banks range from 70.8% to 74.9%. In other words, these countries no longer rely on the dollar or the euro, nor do they trust stocks and bonds as securities — their "ballast" is gold. While Russia's reserves are mainly "paper assets," and nearly half of them have been frozen. Why has such a gap formed?

Data from the World Gold Council shows that Russia ranks among the "top five countries in terms of foreign exchange gold reserves."

The Three Mistakes of the Russian Central Bank

Alexey Zubets, a Ph.D. in Economics, said: "In 2020, the Russian Central Bank judged that it was not advisable to invest in gold due to fluctuations in the gold price — this was a miscalculation, and the first mistake."

"In 2022, when Western countries imposed sanctions on Russia, the Russian Central Bank was unprepared and failed to timely transfer Russia's 'paper assets' in Western banks out — this was the second mistake."

"The third mistake was: even after the sanctions took effect, the Russian Central Bank still refused to invest in gold."

This expert speculated: "Perhaps the Russian Central Bank firmly believed that the United States could stabilize the domestic economy, that a global financial crisis would not occur, that the stock market would continue to rise, and that stock prices would rebound, while the international gold price would fall."

This is the core issue: the people in charge of Russia's economic departments are mostly "liberal financial figures," who have deep faith in the financial strength of the West, believing that "the West will eventually recover stability and achieve growth again, and crises will not happen." They also firmly believe that "Russia can reach an agreement with the West, and sanctions will be lifted," at which point "they can re-invest in safe assets like U.S. Treasury bonds," naturally including (Western) currencies. Looking back at the structure of Russia's foreign exchange gold reserves at the beginning of 2022, we can see: 33.9% in euros, 21.5% in gold, 17.1% in yuan, 10.9% in dollars, and 6.2% in pounds — they hoped to return to this structure, so that gold would naturally become "useless."

Alexey Zubets pointed out: "In fact, 20 years ago, the Russian Central Bank had the opportunity to create a 'ruble linked to gold,' which could have made the Russian financial system the most stable."

Logically speaking, if the Russian ruble became a "gold ruble," countries around the world would be willing to conduct trade with Russia — no political measures could deny the value of gold. However, the Russian Central Bank once again missed this opportunity.

Conclusion: What Will Be the Consequences?

With the continuous rise in gold prices, Russia's "ballast" of gold is constantly shrinking. Affected by the stance of the Russian Central Bank, Russia is missing out on the profits that could have been gained through the price increase of gold every month — after all, gold can be bought low and sold high, and the proceeds can be directly invested in the economy or at least used to fill budget gaps. However, the Russian Central Bank did not take this action.

Liberal financial figures stubbornly believe that the global economy will not experience a crisis; Russia can reach an agreement with the West, and sanctions will be lifted; at that time, they can deposit funds in "enemy currencies" and securities again. Therefore, they believe that gold is unnecessary, and they just need to wait for the sanctions to be lifted. This is their logic.

Under the current ongoing conflict, this stance can be considered "short-sighted" at best, and "betrayal" of Russia at worst.

Original article: https://www.toutiao.com/article/7565350927163605544/

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