U.S. senators want to target Russia's gold reserves
(Kitco News) A group of bipartisan U.S. senators is introducing a bill that would curb Russia's ability to liquidate its gold reserves as escalating sanctions are hurting the country's economy.
The legislation aims to deter the buying of Russian gold.
"The free world's sanctions are devastating Russia's economy — and as long as Putin continues his unprovoked and horrific invasion of Ukraine, we must keep up the pressure," said Senator Angus King (I-Maine) 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."
The bill was introduced by Senator Angus King (I-Maine), John Cornyn (R-Texas), Bill Hagerty (R-Tenn.), and Maggie Hassan (D-N.H.).
According to the latest IMF data, Russia held nearly 2,300 tonnes of gold as of the end of January — the fifth-biggest sovereign gold owner.
U.S. senators want to make sure Russia cannot use its $130 billion worth of gold to avoid sanctions introduced by the West. The bill attempts to close a loophole of Russia buying domestic gold and selling it to international markets, explained Senator Maggie Hassan (D-N.H.)
"This bipartisan bill closes a critical loophole that would allow Russia to sell off its gold reserves to prop up the Russia economy," Hassan 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."
At the beginning of March, the Bank of Russia said it would be restarting its official domestic gold purchases after a two-year hiatus. Some analysts also warned that Russia could soon resort to gold-selling to battle sanctions and a plummeting ruble.
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This is what the new legislation is about
The new legislation would implement secondary sanctions on American entities transacting with or transporting gold from Russia's central bank holdings. Sanctions would also be applied to Americans selling gold electronically or physically in Russia.
"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," King said. "We urge the speedy passage of these bipartisan sanctions to hold Putin accountable for his crimes."
The bill would also provide Americans with further guidance on avoiding these new secondary sections.
"This legislation would apply secondary sanctions to parties who help Russia finance their war by buying or selling this blood gold," Cornyn said in a statement.
In the meantime, gold hit new all-time highs of $2,078.80 an ounce on Tuesday as markets priced in America's ban of Russian oil and other energy imports. April Comex gold futures were last at $2,056.80, up more than 3% on the day.