Blocking Russian gold trade will cost Kremlin $19 billion a year – Blinken
“Selling gold is the second most profitable exporting business, the first one is trading energy resources – and gold lets Russia earn $19 billion a year,” said Blinken.
He said the sanctions imposed by the United States, United Kingdom, and the European Union against Russian Federation have severely hit the country’s economy.
“Though Russia is now earning more on trading oil as it has a higher price, it can’t spend the earnings due to exporting restrictions,” said Blinken.
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“Russia can’t buy what it needs to modernize its defense sector, to modernize defense technologies, to modernize energy exploration. This means each of these sectors will be declining.”
Commenting on the strengthening of the Russian ruble on the domestic market, Blinken said that the Russian currency “is pumped up artificially and this has a huge cost which is devastating for the economy.”
Russia has a 10% share of the global gold supply, most of it is owned by the Russian Central Bank. After Russia invaded Crimea in 2014, its gold reserves grew threefold.
Gold is a publicly-traded precious metal that is often used as a reserve asset to hold value at times of economic uncertainty. The worse the situation in the economy gets, the higher the price of gold. Demand from the jewelry industry also has a substantial influence on the price of gold, but this industry usually is a price-taker on exchanges trading precious metals.
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The G7 group of leading industrialized nations had a meeting on June 26 in Germany’s Bavaria region where the United States, UK, Canada, France, and Japan agreed to restrict trading activities with Russian gold. An official announcement on this should be made on June 28.
Besides sanctioning the Russian economy, the leaders of the G7 countries agreed to guarantee Ukraine all the support it needs to fight the war over the long term.
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U.S. President Joe Biden also announced a start of a global infrastructure program to provide economic stimulus to various regions and to resist China’s infrastructure ambitions.
