The G-7 is banning Russian gold. How does that work?

Gold bars
Banning Russian gold is a way to block off paths between the Russian economy and the broader global financial system, a White House official said.
(Sakchai Lalit / Associated Press)

As the war in Ukraine enters its fifth month, the U.S. and its allies are taking aim at Russia’s second-largest export industry after energy: gold.

On Tuesday, the Group of 7 advanced economies agreed on a ban on Russian gold imports in the latest round of sanctions over Russian President Vladimir Putin’s invasion of Ukraine.

The U.S. says Russia has used gold to support its currency as a way to circumvent the impact of sanctions. One way to do that is by swapping gold for a more liquid foreign exchange that is not subject to current sanctions.


Some experts say that since only a few countries are implementing the gold ban, the move is largely symbolic, while others, including those in the Biden administration, say a ban on imports of Russian gold will target Moscow’s ability to interact with the global financial system.

How a G-7 Russian gold ban would work:

How much gold does Russia have?

Secretary of State Antony J. Blinken told CNN on Sunday that because gold is Russia’s second-most lucrative export after energy and nearly 90% of the revenue from it comes from G-7 countries, “cutting that off, denying access to about $19 billion of revenues a year — that’s significant.”

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Blinken said that without the money, Russia “can’t acquire what it needs to modernize its defense sector, to modernize its technology, to modernize its energy exploration.”

Russia began increasing its gold purchases in 2014, after the U.S. issued sanctions on Russia for Putin’s annexation of Ukraine’s Crimea peninsula. Now the country holds $100 billion to $140 billion in gold reserves, which is roughly 20% of the holdings in the Russian Central Bank, according to U.S. officials.

How would a gold ban work?

While Russia will still able to sell gold to other countries outside the G-7’s jurisdiction, it will “impact the ability of Russia to earn export revenue,” says Chris Weafer, a Russian economy analyst at consulting firm Macro-Advisory.

“It’s that high level of export receipts that is sustaining the country and sustaining the economy since sanctions were ratcheted up” after Russia’s Feb. 24 invasion of Ukraine, Weafer said.


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In practice, it could result in civil or criminal penalties on people who come from countries that have agreed on a gold ban from Russia.

Swiss customs officials Friday said they were tracking roughly three tons of Russian gold — worth more than $202 million — that entered Switzerland from Britain last month as they monitor potential violations of economic sanctions against Russia.

What other measures have been taken on the gold trade?

In March, the U.S. and its allies moved to block financial transactions with Russia’s Central Bank that involve gold, aiming to further restrict the country’s ability to use its international reserves. That came after calls from members of Congress to restrict Russia’s gold trade.

The Treasury Department issued guidance that American individuals, including gold dealers, distributors, wholesalers, buyers and financial institutions, are generally banned from buying, selling or facilitating gold-related transactions involving Russia and the various parties that have been sanctioned.

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How will this move punish Russia?

Like the thousands of sanctions already imposed on Russia, the gold import ban is meant to isolate Russia economically, starve its funding arm and prevent money-laundering.

British Prime Minister Boris Johnson said at the G-7 meetings in Elmau, Germany, that the ban would “directly hit Russian oligarchs and strike at the heart of Putin’s war machine.”


“Putin is squandering his dwindling resources on this pointless and barbaric war. He is bankrolling his ego at the expense of both the Ukrainian and Russian people,” Johnson said.

A White House official told reporters the ban is yet another way to block off paths between the Russian economy and the broader global financial system.