Major Russian Lender Receives Gold Export License as Sanctions Bite

Earlier last week, the Credit Bank of Moscow received a license to export gold from the federal government. This move will make this particular financial institution the latest bank in Russia to involve itself in the trade of precious metals in an effort to counteract the effect sanctions have had on the country.

The primary operators in the Eastern European country’s gold market — Bank VTB and Sberbank Rossii PAO — have been affected significantly by harsh sanctions imposed on Moscow by the West. This comes after Russia sent troops into Ukraine to invade the country in February.

In a statement, the Credit Bank of Moscow revealed that it was focused on the development of operations with precious metals. The bank, which is one of the biggest private lenders in the country, has also been subjected to sanctions in the United States but revealed that no actions had been taken to hinder its domestic operations. The bank added that it was evaluating prospects for the development of its business and following some trends on the financial market.

Currently, Russia is one of the biggest producers of gold in the world, followed by China and Australia. Data from the country’s Ministry of Finance shows that last year, Russia’s production of gold from mines increased by more than 1.5%. However, since countries in the West imposed sanctions on the country, banks and gold miners in Russia are finding it hard to find buyers because of the rapid decline in domestic demand. This is why these institutions, which are still able to trade precious metals abroad, are working on exporting their minerals.

The Russian Central Bank, which was the primary buyer of the country’s gold from commercial banks in the past, has also altered its rules for gold purchases a number of times since the country invaded Ukraine months ago. These changes include a decision to halt all purchases of gold.

The demand for gold bars from Russians increased in March after Moscow removed the 20% VAT imposed on the purchase of gold. Since then, however, the demand has diminished as the ruble experienced some losses. The ruble has also become one of the best-performing currencies in the world because of the central bank control measures imposed to shield Russia’s financial sector from the ravages of war. In a note, analysts revealed that the central bank’s capital control measures had brought Russia’s currency back to its pre-pandemic level.

As less Russian gold finds its way onto the world commodities market, precious metals companies such as Royal Gold Inc. (NASDAQ: RGLD) are likely to deliver greater shareholder value.

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