Jens Asbjørn Bøgen
September alone saw the gold reserves shrink by 6.2 metric tons.
Moscow is burning through its national assets at breakneck speed. For ten straight months, Russia’s central bank has quietly offloaded bullion from state reserves to plug a widening hole in public finances, according to The Moscow Times.
The financial gap has ballooned. Government forecasters now expect the national budget deficit to reach 7.3 trillion rubles, or roughly $81.1 billion, doubling initial projections.
September brought another steep decline, with regulators reporting a drop of 6.2 metric tons. That slide pushed total holdings down to 72.8 million troy ounces, Russia’s thinnest reserve cushion since late 2019.
Decades of accumulation are unraveling fast. Since last December, the central bank has dumped roughly 62 metric tons of bullion in its most aggressive liquidation drive in generations.
Echoes of 1998
History shows just how unusual this scramble is. According to International Monetary Fund figures, Russian authorities have offloaded gold at a faster pace only once before, during the chaotic financial collapse of 1998.
Back then, officials dumped bullion amid a currency crash before repurchasing a fraction, ending the crisis year down 50 metric tons. Today’s drain easily surpasses that mark.
For two decades after that crash, the Kremlin worked relentlessly to rebuild. Leaders multiplied the stockpile fivefold, gathering 2,300 metric tons by early 2022 to claim the fifth-largest gold hoard in the world.
Running out of road
That hard-won buffer is vanishing. Alexander Potavin, an analyst at investment group Finam, told The Moscow Times that authorities routinely tap state reserves when oil and gas income lags, using record bullion prices to secure foreign currency.
The crunch stems directly from soaring military costs. In early March, defense spending officially overtook all social welfare programs combined, forcing officials to raid the National Wealth Fund at a furious tempo.
Vladimir Putin has prioritized the war in Ukraine above all else, leaving the state treasury dangerously exposed. With other liquid assets largely depleted, Moscow has little left to sell besides its dwindling bullion and remaining Chinese yuan.
