“Everything is littered”: Russia has nowhere to put gold after the ban on imports

The gold miners asked the authorities to buy the surplus from the Gokhran or the National Welfare Fund

The ban on the import of Russian gold, introduced by Western countries in response to the NWO, led to overstocking of the domestic market. There is literally nowhere to put gold: the Central Bank does not buy, the jewelry industry does not need such volumes, and hopes for the sale of ingots to the population as an alternative to the dollar and the euro have not yet come true. The gold miners are asking the authorities to buy the excess gold from the Gokhran or the FNB until the end of the special operation. Otherwise, production will stop, and the workers and their families will sit on the neck of the state, they warned at a meeting in the Federation Council.

Western countries officially imposed an embargo on Russian gold in June-July: the United States was the first to impose a ban, then Japan, the UK and the EU joined it. Joe Biden called this sanctions decision one of the most painful for the Kremlin: after all, gold, according to him, is Russia’s most important export after energy, bringing it tens of billions of dollars. Judging by the intensity of passions in the Federation Council, where this topic was discussed on Tuesday, the strike achieved its goal. The head of the Union of Gold Producers, Sergei Kashuba, said that a critical situation had developed in the industry. The cost of production has increased, and there is practically nowhere to sell gold.

Of the 365 tons mined per year, the jewelry industry chooses only 30-35 tons, and individuals who were trying to attract the abolition of VAT, at best, will purchase another 30 tons. Thus, 300 tons will remain in limbo. “People who are standing with a shovel and an excavator bucket were told: go and trade in gold! That’s all the support for the industry, ”Kashuba said in his hearts. He noted that the sale of gold is not a core business of enterprises. And those distribution channels that they still manage to find enrich the intermediaries, not themselves. “Let the Central Bank, the Ministry of Finance, the Gokhran, the National Welfare Fund, anyone, buy out the entire volume of gold that we have produced and that remains after domestic demand is satisfied. Where you send it, decide for yourself, ”Kashuba said, suggesting as an option to use gold to create a new BRICS currency or purchase critical imports.

However, these proposals did not please officials. According to the deputy Head of the Central Bank Alexei Zabotkin, the accumulation of gold in reserves in the current conditions is inappropriate: it will provoke an increase in the money supply and increase inflationary pressure. Gold miners need to look for buyers in the markets of friendly countries in the same way that oil companies do. “The discount for Russian oil is 22%. This is much more than the discount on Russian gold. However, no one is asking us to buy oil for the reserves of the Bank of Russia,” he remarked sarcastically.

In turn, the head of the Department of State Regulation of the Precious Metals Industry of the Ministry of Finance, Yulia Goncharenko, explained why the hopes that the Russians themselves would acquire a significant part of the gold remaining in the country did not come true. (Demand was supposed to be about 50 tons per year, but it is already clear that it will not work to reach this figure.) The reason is the greed of commercial banks. When it became known about the abolition of VAT, banks, anticipating the excitement, sharply raised the price of bullion – at the moment the cost of a gram reached 10 thousand rubles. In the future, it dropped to 3300 rubles. per gram, and now those who invested in gold at the peak feel cheated. “They don’t want to earn any more, but at least sell at about the same price they bought,” Goncharenko complained, explaining that the procedure for buying back gold from citizens in the Russian Federation (unlike, for example, in Kazakhstan, where everything is clear and transparent) is also not worked out. People are actually doomed to carry their bullion to the buyers, where they will at best be accepted at the price of scrap. As for the purchase of gold in the FNB or Gokhran, according to the representative of the Ministry of Finance, such purchases are carried out in the prescribed volumes. All budgetary funds allocated for these purposes have already been spent, and there are no plans to increase the amounts – the state has other important expenses.

Since no solution was found on what to do with the surplus gold, Kashuba said that we must prepare for the worst. “There will be no miracles. If the state does not want to buy gold, then we have no one to sell it to,” he stressed, noting that the result of this policy would be the shutdown of enterprises. The government, in his opinion, should already provide funds to support gold mining workers and their families. The most affected region will be the Magadan region.

Published in the newspaper “Moskovsky Komsomolets” No. 28893 dated October 19, 2022

Newspaper headline:
Golden days of Russia