Money Needed for the War: Russia Sells Off Gold at a Record Pace
22 July 21:10
For the sixth consecutive month, the Bank of Russia has been selling off gold from its reserves to cover the federal budget deficit, which has reached nearly 6 trillion rubles in the first half of the year. This is reported by "Komersant Ukrainian", citing Russian propaganda media.
In June, the Central Bank’s gold reserves—the fifth-largest in the world—decreased by another 0.3 million troy ounces, or 9.33 metric tons, and have declined by 1.4 million ounces, or 43.5 metric tons, since the beginning of the year, according to data from the regulator.
The sell-off was the largest in at least the last quarter-century—the entire period covered by statistics from the World Gold Council. According to its data, the Central Bank has conducted a sale of precious metals on a similar scale only once before—in 2002. At that time, over a six-month period (from January to June), Russia’s gold reserves decreased by 36.1 metric tons.
Even during the pandemic, when the government sold assets from its international reserves to support the ruble and the budget, the Central Bank sold six times less gold—7.6 metric tons between July 2020 and April 2021. As of July 1, 2026, the Central Bank’s gold reserves had fallen to 2,283 metric tons (73.4 million ounces)—the lowest level since February 2020.
The Central Bank likely raised about $5.6 billion from the sale of gold. And this money went toward balancing the budget, Freedom Global analyst Vladimir Chernov told Reuters: since last fall, the regulator has been conducting transactions involving the precious metal on the domestic market, mirroring similar deals by the Ministry of Finance using funds from the National Welfare Fund.
“When oil and gas revenues fall below the level stipulated by the budget rule, or when the fund’s resources are directed toward domestic investments, the Bank of Russia conducts offsetting transactions using liquid reserve assets. In this case, the Central Bank carries out the technical part of the mechanism rather than making a separate decision to cover the budget deficit by selling gold,” Chernov explained.
Gold is suitable for such operations because it is stored in Russia, remains accessible to the regulator, and has risen significantly in value in recent years, he emphasized: “At the same time, the ability to use many foreign currency assets is limited after they were frozen abroad.”
The Central Bank began selling gold because it does not want to “squander” all of its remaining reserves in yuan, as economists Oleksandra Prokopenko and Oleksandr Kolyandr previously wrote. The yuan is the last currency available to the Central Bank for market operations and influencing the ruble exchange rate, and it is not known exactly how much of it remains in the international reserves: The Central Bank classified statistics on the structure of its reserves after it came under sanctions, and $300 billion of its assets in the West were frozen. According to the latest available data, the Central Bank held about $100 billion in Chinese yuan, but that amount may have decreased since then.
According to Chernov, the bulk of the gold was likely sold to Russian banks through both the exchange and over-the-counter markets. Data from the Moscow Exchange confirms that the volume of gold transactions on the exchange has risen sharply this year. In March alone, it reached 42.6 metric tons, of which 14 metric tons were transactions involving the delivery of the metal.
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