Union: New gold sanctions should prompt cbank to buy Russian gold

MOSCOW, Jun 28 (PRIME) -- The negative impact from the Group of Seven sanctions on Russia’s gold exports will grow with time if the central bank does not restart purchases, Chairman of Union of Gold Producers of Russia Sergei Kashuba told PRIME late on Monday.

“The announced sanctions were not a surprise for the Russian gold industry. The U.S. Department of Commerce banned all deals with any gold related to the Russian central bank as early as on March 24, and it was obvious for the gold producing industry that the sanctions of unfriendly countries will sooner or later hit the current gold production,” Kashuba said.

The Russian gold industry has not been selling gold through the organized market trade for three months since London cancelled the Good Delivery status of Russian plants. So far, the companies managed to sell some gold on the internal market, but the alluvial gold production season has started, and the sector is in dire need of additional liquidity of the gold it produces, he said.

The companies are now selling golds mainly through banks that impose steep discounts in the wake of a discount introduced by the central bank for unknown reasons.

The regulator, the Finance Ministry, and the state precious metals repository Gokhran can contribute to support of the industry. The central bank could resume gold purchases at international prices with a 0.5% discount, like it did for some time since 2006, he said.

The jewelry industry consumes 30–35 tonnes of refined gold, and individuals may buy 35–40 tonnes of gold in bullions per year in the best case. Industrial companies can also provide some demand for gold, and it is traded on the Moscow Exchange as well, but given Russia’s output of more than 350 tonnes per year, state procurements of gold are a must, Kashuba said.

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