This report examines how Russia has been using gold since its invasion of Ukraine in 2022, including an outline of Russia's pre-war gold policy, how the Russian gold sector and gold producers currently operate, and how Russia is seeking to generate revenues from gold and develop its international gold trade.

Gold Rush: How Russia is using gold in wartime

John Kennedy, Elena Grossfeld, Zsofia Wolford, Thomas Kenchington

ResearchPublished Sep 9, 2024

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This report examines how Russia has been using gold since its invasion of Ukraine in 2022. It begins with an outline of Russia's pre-war gold policy and describes how it has changed since the start of the war. It provides a discussion of how the gold sector is financed, with attention on the role of Russia's banks and how its gold companies have responded to Western pressure and sanctions. It describes how Russia's gold producers are faring, both in terms of their wartime productivity and access to mining equipment. Additionally, it offers detail on how Russia is seeking to generate revenues from gold and develop its international gold trade. The report concludes with recommending avenues for further investigation.

Key Findings

  • Gold has become a strategic resource for the Russian state since the invasion of Ukraine. It has a bearing on Russia's revenue generation capacity and its monetary policy; it is central to Russia's international campaign for de-dollarisation; it is a major feature of Russia’s engagement in Africa and Central Asia; and it plays an important part in Russia's wartime trade relations.
  • Russia intends to become the world's number one producer of gold, but there are signs that domestic production is flatlining. However, Russian interests hold sizeable stakes in the gold industries of several countries of the former Soviet Union and Africa.
  • Over the last decade, Russia became the world's most important sovereign buyer of gold. In addition, Russia also holds an undisclosed — and possibly sizeable — amount of gold and precious stones.
  • Prior to the invasion of Ukraine, Russia transferred the entire holdings of the National Welfare Fund into yuan (60%) and gold (40%). In hindsight, this was an indication that Russia was preparing for increased Western economic pressure.
  • Gold is Russia's most important revenue-generating metal, but it is not, and will not become, a substitute for oil exports. Western economic pressure has also had a significant impact on Russia's gold mining industry, which also has high dependence on Western equipment and servicing.
  • Gold has been crucial to Russia's most important wartime trading relationships, specifically with China, Turkey, Iran and the UAE. It has also been using gold as means to pay for hard currency, weapons and other goods.

Recommendations

  • Further research is required to shed light on the scale of Russia's international exchange-in-kind activities.
  • Further research is needed into how Russian actors in the gold sector are responding to Western sanctions and tighter supply chains, and where they seek to sell their gold. This will be essential to determine how the Russian gold sector is changing.
  • Further research is needed on what Russia gains from its overseas gold assets.
  • A deeper dive into the topic could explore the extent to which Russia is accessing Western mining equipment.

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RAND Style Manual
Kennedy, John, Elena Grossfeld, Zsofia Wolford, and Thomas Kenchington, Gold Rush: How Russia is using gold in wartime, RAND Corporation, RR-A3230-1, 2024. As of October 6, 2024: https://www.rand.org/pubs/research_reports/RRA3230-1.html
Chicago Manual of Style
Kennedy, John, Elena Grossfeld, Zsofia Wolford, and Thomas Kenchington, Gold Rush: How Russia is using gold in wartime. Santa Monica, CA: RAND Corporation, 2024. https://www.rand.org/pubs/research_reports/RRA3230-1.html.
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The research described in this report was sponsored by the Sanctions Directorate in the Foreign, Commonwealth and Development Office and conducted by RAND Europe.

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