Biden, G7 Will Ban Russian Gold Imports
The comments below are an edited and abridged synopsis of an article by Tyler Durden
Russian energy sanctions have backfired, so the G-7 has announced that they will ban Russian gold imports to impose financial costs on Moscow for its invasion of Ukraine. While refineries could still import Russian gold directly, most have sworn off doing so.
The biggest buyers of gold in recent years have not been G7 countries; instead purchases have been by developing nations that, like Russia, are de-dollarizing and allocating capital into a counterparty-free asset.
As for Russia, it has been an aggressive buyer of gold, not a seller, and if anything Biden’s decision will only make gold the latest to follow the example of oil: Cheaper for Russian friends and much more expensive for Russian enemies.
Still, the US and its allies have been searching for creative ways to punish Russia for the war with Ukraine. Biden announced waves of penalties, and the ruble has risen to a 7-year high against the euro.
Europeans are limited in what they can do because of their dependence on Russian energy imports. They have vowed to phase out Russian oil, but they simply can’t. Ironically, while Europe should be buying more gold to protect the purchasing power of the euro, they are banning themselves from doing so.
As well as banning gold imports, the US has threatened to squeeze Russia by other means. This could backfire, especially if Biden decides to target other Russian metals exports. Unlike gold, other metals from Russia (copper, nickel, palladium) have continued to flow uninterrupted, as Russia is irreplaceable in those supply chains.
As for gold, what happens when the 2nd-largest gold mining nation in the world, and a major source of supply, is cut off from the western market, even if it is allowed to transact with the rest of the world, and will likely boost sales to China and the Middle East, both of whom will be happy to continue purchasing Russian gold? We’ll find out.