The traditional trade of physical gold by major banks for large clients, including gold mining companies and gold refining organizations, has seen a significant decline in recent years. According to a report by the RBC news portal, which cites data from the Russian Central Bank, the amount of physical gold held by Russian banks has halved since the fall of 2023 and as of the end of 2024, it stood at less than 40 tons, a record low since July 2022.
The report notes that the gold volume on January 1 was the lowest since July 2022, when Russian banks increased their gold export transactions, selling the precious metal to their clients, gold producers and gold refining organizations, in the interest of their customers. Following the low point, the gold reserves in the banks’ balance sheets increased, mainly due to the growth in gold production and the recovery of the gold trade within and outside Russia after the sanctions against the major banks that work with physical gold.
Sergei Kashuba, the head of the Russian Gold Producers’ Association, stated that gold production in Russia did not decline in 2024 and that the main exports of gold went to Asian countries, including China, Hong Kong and the United Arab Emirates, without providing exact figures for the export volumes. When asked if the decline in physical gold holdings in the banks’ balance sheets was due to changes in their interaction with producers, Kashuba emphasized that there were no changes in the relationships between banks and gold mining companies in 2024.
Experts from leading Russian banks suggest that the transaction volume with mining and industrial companies has not declined, but the high interest rates and rising gold prices have significantly influenced the behavior of clients in terms of gold bars. They would conduct transactions with gold more quickly, giving the impression that the gold reserves had decreased, although this is not the case. Dmitri Pianov, the first deputy chairman of the VTB Bank, stated that the decline in gold reserves in the banks is due to the characteristics of accounting. Pianov explained, “After the interest rate increase and the emergence of a spread in the costs of taking on assets, it is more profitable for banks to increase the gold turnover. This means that the sale of gold to customers should occur faster and the stay of gold in the bank’s balance sheet is shorter. If we only consider the balances at a specific date, without taking into account the transactions within a month, we get an optical decrease – it seems that there is less gold, which is not the case.