Russian gold worth billions of dollars has quietly changed hands in high-security bank vaults in London, Zurich, and New York in recent months in response to Moscow’s invasion of Ukraine.
Russian bullion worth a total of $2.2 billion at current prices was taken out of 11 Western investment funds’ accounts between July and November, according to data.
As investors withdrew from bullion due to rising interest rates, funds holding gold have decreased recently. But according to the data compiled by Reuters, Russian gold is being exported at a rate that is much faster than that of other nations.
This represents a shift, as some funds have stated they no longer want to hold any assets connected to Russia, despite being a small portion of the total amount of Russian gold held by wealth managers.
According to two sources, exchange traded funds (ETFs) with hundreds of tonnes of gold would like to sell their holdings in metal from Russia. One claimed to have instructed the bank hired to store the gold from his fund to give it the least amount of Russian metal possible.
The majority of ETFs list the bars they own publicly and are among the largest holders of bullion. Investors can check if they have Russian gold because each bar has its origin stamped on it.
Banks refused requests from funds to remove Russian gold in the months following Russia’s invasion of Ukraine out of concern that a sell-off would cause market instability.
Funds are not required to sell their holdings because, unless it is owned by a Russian entity that has been sanctioned by the West, gold produced in Russia before March 7, shortly after Moscow launched what it calls a “special military operation” in Ukraine, is not subject to Western sanctions against Moscow.
However, sanctions prevent funds from holding fresh gold from Russia, one of the world’s top producers, which mines about 330 tonnes annually, or $19 billion at today’s prices.
However, some have gone to Asia, where there has been a lot of demand lately, per bankers, analysts, and customs data.
In the first 11 months of the year, the amount of gold kept in vaults in London that the London Bullion Market Association (LBMA) monitors decreased by 468 tonnes, or 5%. Data from Swiss and British customs show significant shipments to China, India, and other Asian and Middle Eastern nations.