Within the present surroundings of weaponised Western sanctions in opposition to Russia, and the essential significance of financial gold reserves as Russia’s final asset, a well timed query to ask is the place Russia’s gold reserves are literally saved.
The placement of Russia’s gold reserves is very intriguing given the continued freeze of Russia’s international change reserves – greenback, euro, pound – by Western powers, and the actual fact that there’s a US Congress Invoice being launched by some senators in Washington DC to attempt to ‘freeze’ Russia’s gold.
On the outset, some clarifications. A lot of the gold reserves of the Russian Federation are owned and managed by the Financial institution of Russia. And with the Bank of Russia being owned by the Russian Federation, these gold reserves of the Financial institution of Russia are gold reserves of the Russian Federation.
Russia’s Nationwide Wealth Fund (NWF) can even put money into gold and different valuable metals. Whereas the NWF “is managed by the Russian Ministry of Finance based on investment procedures and terms established by the Russian Government, the operational funding of the NWF is carried out by the Financial institution of Russia.” So if the NWF additionally holds gold, which it might nicely do, then this gold would additionally classify as a part of the gold reserves of the Russian Federation.
Moreover, the Russian Federation’s ‘State Fund of Valuable Metals and Valuable Stones’ (Gosfund), which is run by Russian Federation establishment ‘The Gokhran’, can be authorised to carry gold. The Gosfund then could nicely additionally maintain gold, which might even be categorized as a part of the Russian Federations’ gold reserves.
This text, nevertheless, will look simply on the financial gold reserves of the Financial institution of Russia, which at the moment are claimed (by the Financial institution of Russia) to complete 2,299 tonnes.
From 400 tonnes to 2300 tonnes of gold
Within the central financial institution gold market, the Financial institution of Russia stands out for having elevated its financial gold reserves by practically six-fold over a mere 12 years through gold shopping for within the home Russian market. This gold was sourced from Russian gold refiners by Russian business banks, refined to a excessive customary in Russian gold refineries, after which bought by the Russian business banks to the Financial institution of Russia.
Again in 2007, the Financial institution of Russia held about 400 tonnes of financial gold. In the direction of the top of 2007, the Financial institution started aggressively including to its gold holdings, and by early 2011 Russian gold reserves had exceeded 800 tonnes. By the top of 2014, this determine had swelled to greater than 1200 tonnes of gold. By late 2016, the entire breached 1600 tonnes. And by mid 2018, the Financial institution of Russia held greater than 2000 tonnes of financial gold.
The expansion trajectory slowed down barely in the direction of the top of 2018, however by early 2020, the Financial institution of Russia claimed to carry practically 2300 tonnes of gold, an official determine which has not modified by a lot since that point (because the Financial institution of Russia says that it stopped shopping for gold over most of that point).
The explanation for offering this progress abstract of Russian central financial institution gold holdings since 2007 is that it might need some bearing on the place the Financial institution of Russia has saved the extra gold that it bought over the 2008-2020 interval.
The First Go to – January 2011
One of many first references to the Financial institution of Russia’s modern gold storage coverage is from 24 January 2011, and is from a press release feature on the Russian authorities’s personal web site, the place we discover that:
“Prime Minister Vladimir Putin visited the central depository of Russia’s Central Financial institution, which holds two-thirds of the nation’s gold and international change reserves.”
This press launch, which stated that Putin was the primary ever Russian prime minister to go to the gold vault facility, was accompanied by a now well-known photograph of Putin holding a gold bar (see under).
The press launch additionally has three different accompanying photographs of Putin and an entourage touring the depository, one (see under) with the caption:
“On the central depository positioned in downtown Moscow, the prime minister toured the storage amenities for forex reserves and noticed the strategy of management weighing and packing valuable metals.”
There’s additionally a well-used photograph of Putin trying on as a vault worker in blue overalls takes a gold bar out of a picket storage field:
And a photograph of robust material luggage that presumably maintain cash, however as as to if these are normal circulation ruble cash, or gold bullion ruble cash, it’s not clear. In all probability funding gold cash of ‘George the Victorious’.
In the course of the tour of the Moscow vault (observe that the Russian authorities didn’t specify the place in Moscow the gold vault was positioned), Putin requested the then deputy chairman of the Russian central financial institution, Georgy Luntovsky, the place the gold within the vault primarily got here from, to which Luntovsky replied that they “purchased the gold from business banks, citing Nomos Financial institution, VTB and MDM Financial institution as key companions.”
As to the cupboard space and the storage preparations, the press launch said that:
“the central depository has an space of 17,000 sq. metres with 1,500 sq. metres occupied by the saved reserves. Along with gold bars saved in plastic and picket circumstances, an emergency inventory of banknotes is saved. A regular gold bar weighs between 10kg and 14 kg, and small bars weigh between 100g and 1,000 g. The vast majority of Russia’s gold reserves is saved in customary bars.”
At the moment in January 2011, the Financial institution of Russia claimed to carry about 800 tonnes of gold, and if two thirds of this gold was saved within the Moscow vault, that might be about 533 tonnes.
Ulitsa Pravdy – Reality Road, Moscow
There are a heap of extra photographs out there on Russian web sites of Putin’s January 2011 tour of the Financial institution of Russia’s Moscow gold vault, comparable to the next photographs from Russian newspaper Komsomolskaya Pravda (www.kp.ru) which will be seen here and under.
There are additionally some photographs of the identical vault on the Sdelanounas.ru web site here and under, and apparently, the individual posting these photographs stated the vaults in query are the Gokhran vaults in Moscow, and never the Financial institution of Russia vaults. A mistake in terminology? Perhaps. Perhaps not. That poster additionally claimed (on 20 September 2013) that one third of the Financial institution of Russia’s gold reserves had been at the moment being saved in St.Petersburg (extra on that under).
Quick ahead two years to 11 February 2013, and Bloomberg ran a narrative about Russia’s gold reserves, with the headline “Putin Turns Black Gold to Bullion as Russia Outbuys World”. At the moment in February 2013, the Financial institution of Russia claimed to have 958 tonnes of gold, i.e. a rise of about 160 tonnes over January 2011, however the Financial institution (or Bloomberg) was nonetheless quoting that ‘two thirds’ of this gold was in Moscow. This ‘two thirds’ quote may solely be true in 2011 and 2013 if the Financial institution of Russia always allotted two thirds of its continuous gold purchases to the Moscow vault and one third to elsewhere. In any other case it was only a handy quote circulated by the Financial institution of Russia which will have been true in 2011 however that Bloomberg continued to make use of in 2013.
Nonetheless, Bloomberg did present one fascinating piece of knowledge, in that it revealed that the overall deal with and avenue location of the Moscow gold vault is underneath a constructing in Pravda Road in central Moscow:
“Russia retains about two-thirds of its stockpile in a greenish grey stone-and-glass constructing on Ulitsa Pravdy, or Reality Road, in central Moscow. The street is known as after Pravda, the official newspaper of the Communist Get together, which additionally was headquartered there.”
“On 24 January 2011… [Putin] toured the 17,000 square-meter facility, which incorporates 1,500 sq. meters of storage, with First Deputy Chairman Georgy Luntovsky, posing for images lifting an ingot. A lot of the bars weigh 10 to 14 kilograms (22 to 31 kilos) and are boxed in plastic or picket crates alongside an emergency provide of banknotes.”
Prophetically, this Bloomberg article additionally had a quote from Russian parliamentarian Evgeny Fedorov, who instructed Bloomberg in February 2013 that:
“The extra gold a rustic has, the extra sovereignty it’s going to have if there’s a cataclysm with the greenback, the euro, the pound or every other reserve forex”.
Precisely 9 years later that cataclysm took place within the type of Western powers freezing the Financial institution of Russia’s international change reserves in all the US greenback, euro and pound.
Quick ahead one other 4 years from February 2013 to 1 February 2017, and an article appeared on the web site “Russia Past” written by Alexander Bratersky and titled “The place are Russia’s huge gold reserves hidden?”. At the moment on the finish of January 2017, the Financial institution of Russia claimed to have over 1600 tonnes of gold, which was 650 tonnes greater than February 2013, and twice as a lot gold as in January 2011.
Yekaterinburg and St. Petersburg
In his article, Bratersky was nonetheless quoting the ‘two thirds’ of the gold being in Moscow. This might solely have been true if the Russians had been regularly allocating two thirds of recent purchases to the Moscow storage location, however is also a kind of snippets of knowledge which can have been true in 2011 however will not be so correct all by means of Russia’s huge gold accumulation train of 2011 – 2020.
However one necessary piece of recent data which Bratersky did add was that the remainder of the Russian gold that was not saved in Moscow was being saved within the cities of St. Petersburg and Yekaterinburg. For he wrote:
“Whereas Russia doesn’t have a Fort Knox, virtually two-thirds of the nation’s gold is saved in a Central Financial institution repository in Moscow. The remaining is saved away in St. Petersburg and Yekaterinburg. The gold is saved in bullions weighing from 100 grams to 14 kilograms.”
Be aware that in his article, Bratersky didn’t present any sources to his claims that ‘one third’ of Russian gold is saved in some mixture of areas in St. Petersburg and Yekaterinburg.
For many individuals outdoors Russia, St Petersburg will want no introduction, as St Petersburg together with Moscow is certainly one of Russia’s ‘two capitals’ and a significant (and well-known) historic and cultural Russian metropolis on the Baltic Sea adjoining to Finland and Estonia. In actual fact, St Petersburg, is a gateway between Russia and the remainder of Europe. St. Petersburg can be Putin’s house metropolis.
However the metropolis of Yekaterinburg, which is 1700 kms east of Moscow and the capital of the Urals area, could also be much less well-known. Whereas Yekaterinburg is Russia’s fourth largest metropolis by way of inhabitants, it’s typically often known as Russia’s ‘third metropolis’ since, along with Moscow and St Petersburg, Yekaterinburg is culturally and scientifically necessary. Yekaterinburg can be logistically essential as it’s positioned “in the main international transportation corridor which leads from Central Russia to the Far East and is the node of the Urals railway system. It has the most important variety of direct railway connections of any huge regional middle and is third by way of the variety of flights.”
Yekaterinburg (typically often known as Ekaterinburg) can be house to a valuable metals refinery within the type of the “Ekaterinburg non-ferrous metals processing plant”, a refinery which was an LBMA Good Supply Refinery till it received suspended by the LBMA in May 2018.
However Bratersky was not the primary to state that Financial institution of Russia gold was being saved in St Petersburg and Yekaterinburg, as a result of a Russian article from July 2015 on the web site Vegchel.ru additionally said this. At the moment, the Financial institution of Russia claimed to carry about 1240 tonnes of gold. The Vegchel.ru article wrote:
“In the present day, two-thirds of the gold and international change reserves of the Russian Federation are saved within the Central Financial institution’s Central Financial institution, positioned in Moscow on Pravda Road. …The central depository was created in 1940 on the premise of the USSR State Financial institution Administration. Now the Central Depository is a part of the developed system of the Financial institution of Russia.
Along with the principle storage unit in Moscow, inter-regional storage amenities are positioned in St. Petersburg and Yekaterinburg.
Generally, the system liable for the distribution of the nation’s money has 608 multi-level money settlement facilities, every of which has storage amenities.
“The storage of gold reserves is carried out primarily in gold bars weighing from 10 to 14 kg, there are additionally measured bars, the load of which is from 100 grams to at least one kilogram.
There are about 6,100 bins of valuable steel ingots within the Central Vault.”
These bins which the Vegchel.ru article referred to, are the picket bins which you’ll be able to see within the photographs (above) throughout Putin’s tour of the Moscow gold vault in January 2011.
A Far Bigger Vault – January 2018
Quick Ahead to January 2018, and the reporters from Russian newspaper Komsomolskaya Pravda (www.kp.ru) had been again, this time being granted unique entry to what regarded like a far larger and way more fashionable gold vault of the Financial institution of Russia in Moscow. Gone had been the small picket bins, changed as a substitute by soccer area measurement areas stuffed with towers of steel latticed containers, every container holding 20 massive gold bars. The vault staff within the vault had been additionally carrying wine colored overalls.
The KP employees who visited the gold vault had been reporter Yevgeny Belyakov and photojournalist Vladimir Velengurin. There are numerous articles on Russian web sites with a number of photographs of this gold vault taken by the KP photographer in January 2018. Such because the Russia-Insider web site here. Further photographs will be seen on the Yaplakal.com web site here.
Notably, the vault which the KP reporters visited in January 2018 additionally saved hundreds of silver bars organized on pallets and lined with cardboard (see photographs under). So the Financial institution of Russia is not only a gold stacker, however a silver stacker too.
Conclusion
So is the central depository vault on Ulitsa Pravdy (Pravda Road) in Moscow which Putin toured in January 2011 (and which accommodates the picket bins of gold bars), the identical vault which the KP reporters visited in February 2018?
Probably. The vault area was described in 2011 as a “an space of 17,000 sq. metres with 1,500 sq. metres occupied by the saved reserves”, so it’s possible that the realm used to retailer gold bars was prolonged because the Financial institution of Russia’s gold reserves expanded massively over 2011 – 2020. So there could possibly be gold bars nonetheless sorted in small picket bins in addition to saved within the massive steel containers (20 bars per container).
The place are the photographs of the gold vaults of within the Bank of Russia’s St. Petersburg and Bank of Russia’s Yekaterinburg areas? Reply – There aren’t any photographs throughout the St. Petersburg and Yekaterinburg gold vaults so far as I can see. If you recognize in any other case, please spotlight such photographs.
Is the ‘two thirds’ of the gold in Moscow underneath ‘Reality Road’ and ‘one third’ elsewhere nonetheless legitimate, or was it ever so? What’s the ‘Reality? Nobody outdoors of official circles is aware of the reply. However it will make sense from a diversification and safety viewpoint, to not retailer all of the gold in the identical location.
Might the Russian Federation be storing strategic gold reserves outdoors Russia? Sure, however they’d be very silly to have been storing any gold within the vaults of Western powers comparable to within the Financial institution of England in London or the Federal Reserve in New York or the Banque de France in Paris, as gold in such areas would have been confiscated and frozen by now. However Russia could possibly be storing a few of its gold in China, in Beijing or Shanghai. Not to date fetched.
Does Russia’s Nationwide Wealth Fund maintain gold? Probably. Does the Gokhran retailer gold? Probably. Might Russia maintain extra gold than it claims to carry? In all probability.
The Financial institution of Russia has 7 most important regional branches and 73 divisional places of work, all of which will be seen here. In concept, any of those regional or divisional places of work could possibly be storing Financial institution of Russia gold. Moreover, the Vegchel.ru article (above) stated that the Financial institution of Russia forex distribution system “contains 608 money processing centres and virtually all of them has a storage facility.
” In concept, any of those storage amenities could possibly be used to retailer Financial institution of Russia gold.Moreover, all the massive Russian banks, comparable to VTB, Gazprombank, Sberbank, Otkritie and Sovcombank, are energetic within the Russian gold market, and lots of of those banks have their very own non-public vaults. Since these banks work carefully with Russia’s central financial institution within the home Russian gold market, its possible that the big Russian business banks may retailer gold bars on behalf of the Financial institution of Russia or the NWF or the Gokhran.
There are additionally the dear metals refineries comparable to Krastsvetmet, Prioksky, and Moscow Particular Alloys Plant, that are all 100% owned by the Russian Federation. All of those refiners have safe valuable vaults, which could possibly be used to retailer Russian Federation gold.
In brief, Putin’s tour of a gold vault in 2011 and Russian reporters visiting a gold vault in 2018 are nice for optics and advertising and marketing, and the Financial institution of Russia has been very profitable on this regard, however with out some exhausting info about bar numbers and locational particulars from the Russian authorities and Financial institution of Russia, we nonetheless don’t know the true state and site of the Russian Federation’s gold reserves.
Which isn’t shocking, since as Chris Powell of GATA has said in the past and can say once more:
“the quantities, location, and disposition of authorities gold reserves are secrets and techniques extra delicate than the quantities, location, and disposition of nuclear weapons.
Certainly, underneath nuclear weapons management treaties, governments with nuclear weapons have typically shared that form of data, even with hostile powers. However gold reserve data is much extra tightly held and most gold data supplied formally is definitely disinformation.
Why is it this manner? It’s as a result of gold is an much more highly effective weapon than nukes — an alternate forex that’s not essentially underneath any authorities’s energy; a determinant of the worth of different currencies, rates of interest, authorities bonds, and equities.”
