Ukraine war turns Russia into a nation of gold bugs
After Russian president Vladimir Putin announced the country’s invasion of Ukraine last February, Natalia Smirnova’s phone started ringing off the hook. The financial adviser’s Russian clients were panicking. “Should I buy gold?” one asked her. “If worst comes to worst, at least I can bury it.”
That attitude was shared by many — and turned Russia into an unexpected nation of gold bugs almost overnight.
Demand for gold bars and coins last year grew faster in Russia than in any other country, rising to nearly five times the level of the previous year, according to data from the World Gold Council.
While Russia has long been one of the world’s largest gold producers, accounting for almost a tenth of global production, its retail investors have historically shunned the metal, partly due to a 20 per cent value added tax on purchases of bars.
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The switch to gold has been strongly encouraged by the Russian government.
The central bank in March restricted sales of foreign currency, and on the same day Putin scrapped VAT on gold bar purchases, sparking a surge in buying.
Finance minister Anton Siluanov told Russians that the dollar was “volatile” and exposed to “various risks”, highlighting that precious metals were an attractive alternative. “Investing in gold will be a great alternative to dollars amid an unstable geopolitical situation,” he said in a press release in March.
ft.com |
