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New Bill Would Target Russia's Ability To Sell Gold Reserves

John Galt

Updated: March 8, 2022

russia gold china
Editor’s Note:

EDITOR'S NOTE: If there’s anything that monetary history has taught us, it’s that gold always provides a critical lifeline when a country’s currency falls. Currently, this lifeline is providing desperate relief to Russia amid devastating economic sanctions levied by the west. Now, the US Congress is looking to cut that lifeline, estimated at around $132 BILLION, to further punish the Russian economy. Should the bill pass, American entities caught transacting with Russia would suffer secondary sanctions. However, it’s unclear yet as to whether these sanctions on Russian gold reserves might apply to foreign entities. As senator Angus King (I-Maine) said in a statement, “Russia’s massive gold supply is one of the few remaining assets that Putin can use to keep his country’s economy from falling even further." A critical step for the west in disrupting Russia’s economic engine, and a critical lesson for mainstream American investors who still question the value of holding gold in reserve.

A bipartisan group of senators is introducing a bill to prevent Russia from liquidating gold to withstand biting sanctions.

Why it matters: The sanctions against Russia have frozen the country's foreign exchange assets, but its stockpile of gold could be a lifeline. A measure to close the loophole is yet another indication Congress is looking to get ahead of the Biden administration on punitive measures against Russia.

The details: The bill introduced by Sens. Angus King (I-Maine), John Cornyn (R-Texas), Bill Hagerty (R-Tenn.), and Maggie Hassan (D-N.H) would target Russia's ability to sell gold reserves.

  • It would apply secondary sanctions to any American entities knowingly transacting with or transporting gold from Russia’s central bank holdings, or selling gold physically or electronically in Russia.
  • The goal is to include the legislation in the omnibus spending bill that lawmakers hope to pass by Friday, an aide familiar with the matter told Axios.

By the numbers: Russia holds around $132 billion in gold reserves.

What they're saying: “Russia’s massive gold supply is one of the few remaining assets that Putin can use to keep his country’s economy from falling even further," King said in a statement. "By sanctioning these reserves, we can further isolate Russia from the world’s economy and increase the difficulty of Putin’s increasingly-costly military campaign."

  • "Russia has taken a page out of Venezuela’s book by exploiting a loophole in current sanctions that allows them to launder money through the purchase and sale of gold," Cornyn said.
  • "The U.S. and our allies must be steadfast in standing up to Russian aggression and ensure that we block any escape hatch Putin has in getting around the full weight of our sanctions," said Hassan.

The big picture: Lawmakers looking to approve an aid package for Ukraine as a part of the larger omnibus spending bill are running up against two pressing deadlines: March 11 to avoid a government shutdown, and the ongoing Russian invasion.

Originally published on Axios.

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