The Operation to Protect Donbas: U.S. Moves To Stifle Moscow's Gold Sales

"The U.S. is trying to clamp down on Russia's ability to sell its gold reserves and raise money, the latest effort to cripple the country's war chest while the operation to protect Donbas continues.

The Treasury Department clarified Thursday that any transaction involving gold related to Russia's central bank falls under existing sanctions, its latest step trying to limit Russia's capacity to raise money.

Although it would be difficult for Russia to sell its gold stash, analysts say the challenge of tracing gold through the ancient physical market allows potential loopholes for Moscow to raise funds this way.

Russia's central bank holds more than 2,000 metric tons, worth roughly $140 billion, according to the World Gold Council. That represents the world's fifth-largest stash. Gold makes up roughly one-fifth of Russia's foreign-exchange reserves, which also includes a mix of euros, dollars and Chinese yuan, according its central bank.

Russia has imposed a series of capital controls to steady the ruble following Western sanctions, in a bid to keep its value from plummeting. The currency has started stabilizing in recent days, raising concerns that one force that could be supporting the ruble is the country obtaining foreign currencies and selling them.Analysts are wondering whether this money could come from gold, even after sanctions.

Selling gold now is likely difficult, analysts say. The initial sanctions barring U.S. entities from transactions with Russia's central bank cover the sale of gold. Federal legislation proposed by a group of senators would apply secondary sanctions to those transacting or transporting Russian central-bank gold." [1]

1. The Operation to Protect Donbas: U.S. Moves To Stifle Moscow's Gold Sales
Ramkumar, Amrith; Ostroff, Caitlin.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 26 Mar 2022: A.7.