Russia Retail Gold Purchases Reach 200 Tons

Russian households have purchased approximately 200 tons of gold since March 2022. This volume is 1.5 times the 131.5 tons held by the National Wealth Fund as of September 1. The amount represents nearly 9% of Russia's total gold reserves of 2,277 tons. These figures were disclosed by Deputy Finance Minister Alexei Moiseev.

Demand for physical bullion rose after authorities restricted foreign currency withdrawals. The government abolished VAT on gold bar purchases retroactively from March 2022. This policy removed a tax burden that previously reduced the attractiveness of reselling bars. The changes incentivized the conversion of cash savings into precious metals.

Shift Toward Smaller Bar Formats

Initial purchases favored large bars weighing about 12 kilograms. Wealthy banking clients converted foreign currency holdings into these units. Demand later shifted toward standardized 100-gram bars. Interest in the larger format has recently increased again.

The accounting price of gold stood at 12,340 rubles per gram on September 9. A 12-kilogram bar was valued at approximately 147 million rubles. This asset class offers protection against ruble depreciation. It also serves as a hedge against potential deposit restrictions.

Substitution of Foreign Cash Holdings

Moiseev expects gold to replace cash foreign currency as a savings vehicle. Sanctions have restricted the import of US dollar and euro banknotes. Households held around 7.6 trillion rubles in foreign currency cash as of August 1. At the prevailing rate, this sum corresponds to roughly 720 tons of gold.

This potential conversion volume exceeds Russia's annual gold production. The World Gold Council estimated production at 330 tons for 2024. This figure declined from 345 tons in the previous year. Natural Resources Minister Alexander Kozlov forecast production could rise to 480-500 tons this year.

Regulation of Physical Gold Exports

Domestic consumption accounts for about 22% of total gold production. The Union of Gold Producers states that 7% is sold on the Moscow Exchange. Six percent goes to the jewelry sector, and 5% is purchased by individuals. The industry aims to raise domestic sales to half of total production.

Authorities have reported cases of illegal gold export. One incident involved a woman attempting to take bars to Istanbul concealed in chocolate wrappers. To curb such activity, Russia banned individuals from taking more than 100 grams of bullion out of the country from May 1. These measures target unreported cross-border movements of physical assets.