Gold is extremely important to the Russian economy. Not only is the Kremlin a major producer of gold, they use the precious metal in trade and commerce particularly with countries less friendly to the U.S. like China and Iran. The Central Bank of Russia has been feverishly adding to its gold reserves over the past decade, largely in anticipation of sanctions imposed by the West in light of Vladmir Putin’s imperialistic ambitions. Gold’s intrinsic value and high liquidity has helped the Russian economy survive the steep financial penalties imposed by other nations. Despite a host of injunctions and trade restrictions — Putin has not only been able to grow Russia’s economic output but also fuel its insatiable war machine.
The Crimean Gold Grab
Russia’s gold buying spree began in earnest after the annexation of Crimea which resulted in sanctions levied by the United States and the European Union. The Russian central bank added almost 93 tonnes of gold to their reserves between July and September of 2014. During that period almost 60% of all net gold purchases were made by Russia.1https://www.theguardian.com/news/datablog/2014/nov/14/russia-goes-on-decades-biggest-gold-buying-spree
Over the next six years the Bank of Russia went on to increase its gold holdings by another 1,244 tonnes, amassing billions in reserves and banking huge gains on rising gold prices.
“Between 2014 and 2020, a time when the gold price ranged from about $1,100 to $1,500 per ounce, it increased its reserves of the precious metal by 40 million ounces.
Since then, the metal’s price has more than doubled, pushing Russia’s total international reserves close to a historical high of nearly $650 billion, as of April 1.”2https://www.bloomberg.com/news/articles/2025-04-07/russia-s-gold-reserves-surge-in-value-offsetting-frozen-assets
Following Russia’s 2022 invasion of Ukraine, the west imposed more sanctions and even confiscated Russian central bank funds, but the Kremlin was well prepared. Despite holding half of their reserves in dollars, euros and British pounds — the balance was held in yuan and physical gold.
Russia Pegs the Ruble to Gold
A 2024 opinion piece from Dalhousie University explained that despite more than 16,000 sanctions levied against Russia, both their economy and their war efforts continue to grow fueled and funded by their own gold standard.
“Since 2013, Russia has been preparing for western sanctions and managed to isolate its economy from transactions requiring American dollars. In early 2022, Russia pegged its currency, the ruble, to gold, and 5,000 rubles will now buy an ounce of pure gold. The plan was to shift the currency away from a pegged value and into the gold standard itself so the ruble would become a credible gold substitute at a fixed rate … Billions upon billions of dollars of Russian gold is being freely traded at top dollar while avoiding every one of those 16,000 sanctions. That’s why global sanctions against Russia haven’t derailed a thing.”3https://www.dal.ca/news/2024/03/22/putin-gold-sanctions.html
Russia’s strategic gold purchases over the past decade have dramatically increased the value of their reserves, effectively offsetting roughly a third of the assets that have been frozen by the West.4https://www.mining.com/web/russias-embrace-of-gold-eases-loss-of-reserves-frozen-by-war/ Gold has not only helped Russia manage its economy in the face of extremely stiff sanctions, it has also allowed it to expand via its “gold-for-goods” trade.
Rand Europe’s “Gold Rush – How Russia is Using Gold in Wartime,” summarized how Russia is using its gold price windfall to fuel its offensive into Ukraine:
“In 2023, research by Sayari found that entities in Russia, including a then-unsanctioned bank, had shipped gold worth $725m to entities in Turkey and the UAE, and cash in three currencies worth $82m was shipped from the same entities to Russia. It therefore stands to reason that non-sanctioned banks and other entities are working more with Russia’s gold producers than before the war … Since Russia has 320 operating banks and 36 non-bank financial institutions, it is plausible that barter-type gold transactions are now widespread. For Russia, they provide a means for acquiring a wide range of goods – including weapons and other vital inputs – and to evade sanctions.”5https://www.rand.org/content/dam/rand/pubs/research_reports/RRA3200/RRA3230-1/RAND_RRA3230-1.summary.pdf
Gold Reserves are Not Frozen
Without its large gold holdings, it is unlikely that Russia would have been able to endure the sanctions imposed by the west. It is also extremely unlikely that they would have been able to sustain the costly war in Ukraine or that Putin would have survived politically.
Gold is not subject to sanctions, embargoes or restrictions and Russia is using its vast gold reserves to secure hard currency, obtain goods, enact trade, and acquire weapons.
According to Ukrainian News Agency RBC:
“Using gold as a payment instrument is significantly more convenient under sanctions. Currency transactions are monitored through international systems such as SWIFT and others – gold is not subject to such control. A country’s gold cannot be frozen by the decision of other countries. Furthermore, due to weak oversight, there is the possibility of selling gold to third countries via anonymous channels and exchanges.”6https://newsukraine.rbc.ua/news/russia-s-gold-reserves-surge-why-putin-has-1744202381.html
The gold-backed Russian economy has proven to be resilient, adaptable and durable. And despite reports of rising inflation, labor shortages and soaring military costs, its vast gold depositories make it well-placed to support the Kremlin’s ambitions in Ukraine and beyond.7https://www.rusi.org/explore-our-research/publications/commentary/russias-wartime-economy-isnt-weak-it-looks
Russia under Putin’s command continues to be an aggressor on the world stage. And those nations seeking to exert economic pressure to compel the Kremlin to engage in meaningful peace talks have underestimated the power that gold yields in global trade. Putin has not — and he has used the world’s oldest and most coveted metal to effectively nullify the impact of modern sanctions.
“The sanctions targeting the Central Bank of Russia have “frozen” the country’s foreign exchange assets, most of which are held in accounts with monetary authorities and financial institutions outside of Russia. But not all of Russia’s reserve stockpile lies in foreign accounts. A sizeable portion, about $120 billion or so, sits in Russian vaults in the form of monetary gold … for an almost fully isolated country, gold can offer a lifeline when other, more conventional, assets cannot.”8https://warontherocks.com/2022/03/the-unfreezable-asset-gold-sanctions-and-russia/
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- https://www.theguardian.com/news/datablog/2014/nov/14/russia-goes-on-decades-biggest-gold-buying-spree
- https://www.bloomberg.com/news/articles/2025-04-07/russia-s-gold-reserves-surge-in-value-offsetting-frozen-assets
- https://www.dal.ca/news/2024/03/22/putin-gold-sanctions.html
- https://www.mining.com/web/russias-embrace-of-gold-eases-loss-of-reserves-frozen-by-war/
- https://www.rand.org/content/dam/rand/pubs/research_reports/RRA3200/RRA3230-1/RAND_RRA3230-1.summary.pdf
- https://newsukraine.rbc.ua/news/russia-s-gold-reserves-surge-why-putin-has-1744202381.html
- https://www.rusi.org/explore-our-research/publications/commentary/russias-wartime-economy-isnt-weak-it-looks
- https://warontherocks.com/2022/03/the-unfreezable-asset-gold-sanctions-and-russia/
