Illicit gold trading in Russia hikes as XAU drops below $1.9K

Key Takeaways:

  • Gold drops below $1.9K against the strengthening dollar amid the war in Ukraine.
  • Russia grows its gold reserve, contemplating the possibility of return to the gold standard.
  • Meanwhile, illicit gold trade surged, according to the GI-TOC.
Illicit gold trading in Russia hikes as XAU drops below $1.9K
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YEREVAN ( – Experts suggest Russia may use illicit gold trading to sidestep the sanctions imposed by the U.S. and the European Union. Meanwhile, the gold spot price stood at $1,898 in Wednesday’s European session against the rising broad dollar, which recovered due to the Federal Reserve adopting an aggressive hawkish policy against inflation.

Illegal Gold Trade Surges in Russia
Gold (XAU) drops against the rising DXY. Source:

However, the yellow metal remains a key sanctuary asset amid the continuously destructive war in Ukraine. In detail, Russian aggression against the neighboring country triggered an array of sanctions from the European Union, the United States, and other countries.

Also read: Gold outruns Bitcoin as XAU hits 18-month high amid worsening Ukraine-Russian conflict.

Isolated Russia gobbles gold

Thus, as CoinChapter previously reported, the ‘West’ cut Russia off from Forex and other critical international financial institutions on Feb. 27. However, the Kremlin had been developing a strategy to increase its gold reserve since the Crimea invasion of 2014.

Russia has stretched the precious metal reserve to $643 billion as of February 24, 2022. The statistics show a 41% increase in 4 years, as the reserves stood at $448 billion in 2018. 

Moreover, a Russian lawmaker earlier disclosed government plans to pass a bill to remove a 20% value-added tax on gold investments. The Kremlin sought to stabilize the financial sector in Russia and allow people to invest in other precious metals against the U.S. dollar, possibly returning to the gold standard.

Also read: Russia returns to gold standard to alleviate global economic sanctions.

In detail, the gold standard is a monetary system in which the Russian Ruble is pegged to a fixed value of gold. Thus, a Russian Ruble gold standard could support the currency but, at the same time, facilitate financial isolation.

Meanwhile, the Central Bank of Russia announced its plans to purchase gold for a fixed price. The latter would stand at 5,000 RUB per gram (equivalent to over $2,000 per ounce) until June 30.

Illegal Gold trade surges in Russia?

As the global market experiences more turbulence due to the ongoing raging war in Ukraine, experts warn of growing illicit gold trading in Russia, one of the world’s largest gold producers. Global Initiative Against Transnational Organized Crime (GI-TOC) published a report last week, presenting the situation in numbers.

Also read: Cryptocurrency will displace traditional investments within a decade —Report.

Gold can be physically moved around the world outside of digital financial networks, including SWIFT financial messaging, making it difficult to track. Gold is also easily laundered in global markets through not declaring or disguising its origins.

read the report.

The experts also added that Kremlin could use foreign exchange reserves accessed through illicit gold markets for imports. Russia could further use those imports to fund its military operations or “compensate sanctioned Russian oligarchs for their losses.”

Moreover, the report claimed that non-governmental entities, like separate sanctioned actors, may also “make use of criminal networks to launder and smuggle gold.”

Also read: EU Lawmaker wants Bitcoin (BTC) mining banned: Favor Ethereum (ETH) instead.

Will illicit gold trading in Russia help Ruble?

As of late April, the war in Ukraine and the subsequent sanctions against Russia were still ongoing. The turbulent market conditions that typically lead to heightened demand for sanctuary assets remain. However, the strengthening dollar might have pushed the yellow metal down a slippery slope in the previous week.

Nonetheless, Russia remains a large player in the precious metal game, adding up to its reserves. And if the illegal gold trade surges in Russia, the ruble could get additional support from the trade.

Russia may use illicit gold markets, Illegal Gold Trade Surges in Russia, illicit gold trading in Russia

Illicit gold trading in Russia, Illicit gold trading in Russia hikes as XAU drops below $1.9K

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