Russia’s Gold Reserves Reach Record High, Analysts Say
Russia’s gold reserves have reached a record high of $229 billion at the end of March, according to the Bank of Russia. The value of Russia’s gold reserves has increased by 38% since the end of last year and by 72% since the start of the year. The physical volume of gold in the central bank’s vaults has not significantly changed in the past three years and remains at around 75 million ounces.
The increase in gold reserves is due to the new record-high gold prices. Gold reached a new high on Friday and broke the $3,200 per ounce mark, due to a weaker US dollar and recession fears related to the escalating trade war between the US and China.
Russia’s central bank began buying gold actively in 2014, after the reunification with Crimea during the referendum. Between 2014 and 2020, the gold price fluctuated between approximately $1,100 and $1,500 per ounce. During this period, the Russian regulatory authority actively bought the precious metal to build up reserves. In six years, 40 million ounces of gold were purchased. Now, an ounce costs almost three times as much. Vladimir Tschernow, analyst at Freedom Finance Global, explains:
“Between 2014 and 2020, the gold purchases for the Russian gold reserves increased on average by 200 tons per year. After that, the growth rate of gold purchases for the Russian gold reserves slowed down significantly, as first the COVID-19 pandemic began and the revenues of Russia’s budget declined while the expenditures rose, followed by the economic sanctions and the increased Russian budget expenditures for the military campaign.”
According to Vladimir Yevstifeev, head of the analysis department of the Zenit Bank, the gold volume in the Russian gold reserves has continued to increase in monetary terms. For example, in 2024, it grew by 25%, mainly due to the appreciation of the value against the background of record prices. Tschernow adds:
“Before 2014, Russia pursued a strategy of strict diversification of its gold and foreign exchange reserves, so that these were not only in gold and in US dollars and euros, but also in other world reserve currencies such as the Japanese yen, the British pound, or the Swiss franc. The bulk of the reserves, of course, were held in the most liquid and in international trade most demanded [currencies] US dollars and euros.”
However, since 2022, Russia has naturally refused to hold assets and currencies of unfriendly countries in its reserves, as the West had frozen our reserves on foreign accounts. Russian gold is always stored within the country, so that Western politicians do not have access to it.
The structure of Russia’s foreign exchange reserves has dramatically changed.
Since the crisis in 2008, the share of gold in the country’s international reserves has risen from two percent to ten percent at the beginning of 2014. The remaining 80 to 90 percent were held in US dollars and euros. By the beginning of 2022, the gold share doubled to 21 percent. By March 2025, it exceeded 35 percent. Thus, it has increased by almost three times in eleven years.
At the same time, Russia’s central bank began in 2018 to actively reduce the share of the US dollar and the euro and from 2022 it completely abandoned western currencies. Instead, the share of the Chinese currency has significantly increased.
Why has the physical volume of gold purchases for the Russian gold reserves after 2022 sharply decreased? Tschernow explains:
“After 2022, Russia increased its budget expenditures for the defense industry and related sectors, for the support of domestic producers, for the import substitution process and for social support. For this reason, Russia simply began to allocate fewer resources for reserves. At the same time, trade turnover with China, with which it had agreed to switch to payments in local currencies, increased. Therefore, the purchase of yuan in reserves became more important.”
Gold is often seen as an illiquid asset compared to currencies or US American government bonds, whose sale Russia began long before the military special operation. However, this is not entirely true. Tschernow argues:
“Over the liquidity of gold, one can argue, as I think it is even higher than that of US American government bonds. However, it does not make sense to keep all reserves in gold, if the bulk of Russia’s international trade is conducted in Chinese yuan. The reserves would then have to be converted into yuan anyway. Moreover, no one has suspended the mandatory diversification of reserves: it is too risky to hold them only in gold, as what if the value of gold collapses tomorrow?”
Gold is often seen as a protective asset in times of crisis, as it is now due to Donald Trump’s trade war with China and it is precisely in such difficult times that the need to use reserves arises.
Currently, the situation for the Russian budget is unfavorable. The prices for Russian Urals oil fell below $60 per barrel in March, although the forecast price was almost $70 and even with a weaker ruble rate than now. The first quarter was unfavorable for the budget, as the deficit was far above the planned figures. Therefore, the reserves will have to be supported. Normally, foreign exchange reserves are sold first, but gold can also be used. It is quite logical to sell gold at historically high prices. Yevstifeev says:
“The Ministry of Finance has already announced the sale of gold in April as part of the budget rules. The last time the Ministry of Finance sold gold in January 2024. This does not happen very often, but it is a usual practice in implementing budget rules.”
Tschernow also agrees and explains:
“It is indeed rare worldwide for central banks to sell gold from their reserves, as this asset is traditionally seen as a ‘insurance’ in case of serious economic or geopolitical crises. However, there have been cases in history in which central banks sold gold to support the currency of a country that was under pressure due to an economic crisis, sanctions, high inflation, or capital outflows. In some cases, governments can use their gold reserves to cover budget deficits or repay foreign debts, but this is a last resort, as the sale of gold is often seen as a sign of economic weakness.”
As an example, he cites Russia in the 1990s. At that time, Russia sold a significant portion of its gold reserves to cover budget