“The amount of funds allocated for purchases of foreign currency and gold totals 172.9 billion rubles,” the ministry said in a statement. “Transactions will be carried out from September 6 to October 4, 2024, respectively, daily volume of purchase of foreign currency and gold will equal 8.2 billion rubles.”

This marks a sevenfold increase in purchases of physical precious metals over the previous spend, which has already been much higher for the last year. The Finance Ministry also projected “windfall” oil and gas revenues of 162 billion rubles in September, noting that actual oil and gas revenue in August exceeded initial expectations by 10.9 billion rubles ($129 million).

These revised figures “make it possible to estimate the volume of operations conducted by the Bank of Russia on the currency market related to the replenishment and use of the National Wealth Fund,” the ministry added.

With the new transaction volumes set for the September 6 to October 4 period, the Central Bank is expected to sell 0.2 billion rubles per day during the previous period.

After an 18-month hiatus, Russia’s finance ministry resumed gold and currency purchases in August 2023, capitalizing on higher oil prices. The country had previously paused foreign exchange interventions in January 2023, selling yuan reserves as part of a budgetary strategy to shield the economy from commodity market volatility. This program was initially suspended following the invasion of Ukraine in February 2022.

As Western sanctions have frozen a substantial portion of Russia’s currency reserves, the yuan remains the primary asset available for these operations. Notably, approximately one-third of Russia’s budget revenues are derived from the oil and gas sector, underscoring the critical role of these commodities in the nation’s economic strategy.

Editor’s Commentary

What do they know? Is this just a response to their oil windfall so they can put more of their profits into the financial higher ground of physical precious metals or do they have something else planned? Either way, it’s just the latest of many signs that those “in the know” are taking advantage of the gold and silver market even though both are near record high prices.

With BRICS hinting at a CBDC backed by gold and the shift away from western payment systems, it seems likely that this move is preparatory for big moves ahead. If those moves are just being made by Russia, then this is a huge deal. If they’re also going to be done by China and other BRICS nations in the future, then this is a gamechanger.

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