Russian Gold reserves down 62 tonnes this year as they support the wartime economy

Russia is demonstrating that gold's role as money has not diminished. It remains a critical monetary reserve asset that can be utilized when conventional revenue and financing are restricted.

Russia drew down its gold holdings by another 6.2 tonnes in September. That dropped the country’s gold reserves to 2,264 tonnes, the lowest level since 2019.

Since December 2025, Russia’s reported gold holdings have declined by 2 million ounces (approximately 62 tonnes). In the face of economic sanctions and wartime expenses, the Russian government has used the yellow metal to support its economy. 

Russia has reported a decrease in its gold reserves for 10 straight months.

Interestingly, this isn’t the most rapid gold drawdown in modern Russian history. During the 1998 financial crisis, the Bank of Russia sold 118 tonnes of gold in three months when the government defaulted on domestic debt and the ruble collapsed.

Most of the Russian gold appears to be flowing through Hong Kong. The special Chinese administrative region imported a record 112.7 tonnes of Russian gold through the first seven months of 2026. It imported 92.1 tonnes of Russian gold in 2025. That compares with just 3.3 tonnes in 2021, the year before Russia invaded Ukraine.

The Russian economy is teetering under sanction pressure. The West froze Russian assets and locked the country out of the SWIFT payment system, effectively cutting the country off from the dollar-denominated global economy. According to the Moscow Times, the Putin administration faces a 7.3 trillion-ruble deficit this year, twice the forecast target.

According to reporting by the Times, “The latest sales are linked to Central Bank operations that mirror earlier transactions by the Finance Ministry involving the National Wealth Fund, Russia’s rainy-day fund, Reuters has reported. Under that mechanism, the Central Bank sells gold into the market to offset earlier sales by the ministry from the fund to finance the budget deficit.”

Finam analyst Alexander Potavin said gold sales could also help the Russian central bank address foreign currency liquidity shortages, noting that higher global prices likely incentivized selling.  

Bank of Russia Governor Elvira Nabiullina addressed the decline in Russia’s gold reserves at a press conference last month, calling the drawdown a "small decrease" related to "Finance Ministry's operations, with funds from the National Wealth Fund; this happens as part of the fiscal rule. Gold is also used for the production of coins." 

"We do not disclose additional details of our operations with gold.”

Russia was prepared for this.

The Bank of Russia launched a gold buying spree beginning in 2014. Over the next six years, the Russian central bank increased its reserves by around 40 million ounces (1,244 tonnes).

During this period, the gold price ranged from $1,100 to $1,500 an ounce.

When the war began, Russia held about half of its reserves in dollar, euro, and pound sterling assets. The other half was in yuan and gold, which remained accessible.

The Russians also made a shrewd move before they invaded Ukraine, transferring their National Welfare Fund holdings into yuan (60 percent) and gold (40 percent). A RAND Corporation study noted, “This was an indication that Russia was preparing for increased Western economic pressure. During the war, Russia has been using these funds to support the budget.”

Last year, Bloomberg Economics analyst Alex Isakov noted that “Accumulating a gold pile was a hedge against geopolitical shocks — it worked.”

“The Bank of Russia’s approach to gold purchases addressed three different goals: (i) diversifying international reserve assets away from the risks of reserve currency issuing countries, (ii) boosting domestic local currency liquidity by exchanging physical gold for rubles, and (iii) providing a source of stable demand for local gold miners. The increase in the value of gold holdings proves the diversification and hedging value of gold reserves.”

As the RAND report put it, “Gold has become a strategic resource for the Russian state.” 

“Gold has a bearing on Russia’s revenue generation capacity and its monetary policy; it is central to Russia’s international campaign for de-dollarization; and it plays an important part in Russia’s wartime trade relations, notably as a means of payment.
“The Russian state is evidently encouraging barter and exchange-in-kind, and otherwise resorting to gold to secure hard currency and foreign goods, but the scale, terms, and participants in these activities is unknown.”

According to the Kyiv Independent, Russia is exchanging gold for other currencies, including dollars and euros. The country has also used gold directly for purchases.

“There is little doubt that Russia is already using gold to pay for goods it cannot procure conventionally, or for transactions it wishes to obscure. An open-source investigation by Sayari, for example, revealed that unsanctioned banks were trading gold for cash in Turkey. Russia has also partly paid Iranian drone manufacturer Sahara Thunder in gold for 6,000 Shahed drones and related equipment.”

Despite its best efforts, the West has found it difficult to stop Russia from using gold due to its fungible nature (easy to exchange) and global demand for the precious metal. 

Gold is money, and it is recognized as such everywhere. Even if they don’t want dollars or some other fiat currencies, everybody wants gold.

This is not to justify Russia’s wartime actions. It merely underscores gold's historic role as money and its important place in the global economy. When fiat currencies are cut off or fail, gold will always remain a viable alternative.

Russia’s recent selling reveals just why central banks hold gold. It serves as a long-term reserve free from counterparty risk. And since its value is recognized globally, it can serve as an emergency fund – even if you’ve been locked out of the global dollar-dominated financial system.