G7 to ban Russian gold in a 'strike at the heart' of Putin's war effort

RFE/RL
Sun, 26 Jun 2022 00:00 UTC

Comment: Going on past form, this means gold is going to spike in value (which really means the dollar and euro are going to fall further)...

© Reuters

Leaders of the Group of Seven (G7) industrialized democracies gathering for a two-day summit in the German Alps on June 26 will announce a ban on new imports of Russian gold to boost sanctions, according to British and U.S. officials.

Wealthy Russians have been purchasing gold bullion recently to ease the sting of international financial punishments put in place since Russian troops invaded Ukraine on February 24, the British government said in a statement.

"The measures we have announced today will directly hit Russian oligarchs and strike at the heart of [Russian President Vladimir] Putin's war machine," British Prime Minister Boris Johnson said in the statement. London said Russian gold exports totaled more than $15 billion last year.

The ban should be announced on June 27, will come into force quickly, and will apply to newly mined or refined gold, officials said.

U.S. President Joe Biden said via Twitter that the gold ban represents further "unprecedented costs on Putin to deny him the revenue he needs to fund his war against Ukraine." Biden called gold a "major export that rakes in tens of billions of dollars for Russia."

The G7 comprises Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

G7 leaders will meet beginning on June 26 at a castle in Germany's Alps, with a NATO summit to follow on June 29 in Madrid.

Comment: Who else is in 'banning Russian gold' mood?

According to a statement by the UK government:

"This measure will have global reach, shutting the commodity out of formal international markets" and delivering a 'huge impact' on Moscow's potential to generate revenue across the world, adding that "the step is underpinned by London's central role in the metals trade."

Shipments between Russia and London have been reduced to almost zero. The London Bullion Market Association, which sets the standards for the market, removed Russian gold refiners from its accredited list in March.

Earlier this week, Reuters reported that EU leaders are considering gold as one of the targets for the next round of sanctions on Russia. The agency's source, however, did not clarify whether the move would hit exports of gold, imports, or both.

The measure announced by London will apply to gold leaving Russia for the first time, and the US Treasury is expected to issue a ban on Tuesday as quoted by Bloomberg.

While Western sanctions have largely closed off European and US markets to gold from the world's second-biggest bullion miner, the G7's move is expected to completely sever Russia from the world's top two trading centers, London and New York.

According to UN Comtrade data, as cited by the agency, the $15 billion in Russian gold that arrived in London last year made up 28% of UK gold imports. Russia still has the option to sell the precious metal directly to refineries, or look for new buyers, such as China, India, and the Middle East, which have not supported the sanctions and are not part of the G7.