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Sanctioning Russia's gold won't work but may prompt repatriation from NY Fed, Lundin says
What Traders Think of U.S.-led Efforts to Block Gold Transactions by Russia's Central Bank
By Myra P. Saefong
MatketWatch, New York
Thursday, March 25, 2022
The U.S. made it clear on Thursday that any transaction involving gold related to the Central Bank of the Russian Federation is covered by existing sanctions, but that's unlikely to have an immediate impact on the gold market despite Russia's estimated $132 billion in gold stockpiles.
"Russia's giant bullion holdings could, in theory, help finance its war machine if Moscow can find a buyer among foreign banks or governments," Adrian Ash, director of research at BullionVault, told MarketWatch. ...
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"Any sanctions on Russia's gold reserves would do little more than reveal the degree to which government bureaucrats don't understand gold," Brien Lundin, editor of Gold Newsletter, told MarketWatch. "The beauty of gold, unlike currencies, is that it is an untrackable store of value that has no counterparty," he said.
"At least in smaller amounts, Russia could easily sell gold on the open market," he said. "In bulk quantities, it could just as easily sell the gold to China with no record of the transaction," Lundin said, adding that China has demonstrated that it is an "eager buyer of gold."
He believes the end result of the gold-related actions would be to "alert the 36 countries who hold significant portions of their gold reserves in the values of the New York Federal Reserve that they should take their gold back as soon as possible."
If that happened, that would "create significant turmoil in the gold market since the [Federal Reserve] has demonstrated difficulty in actually finding and transporting the gold held for other nations," Lundin said. The Fed famously told Germany it would take seven years to repatriate just a portion of their holdings, though it took only four years, he said. ...
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