Russia is currently in the middle of its biggest sustained drawdown of gold reserves since the 1998 financial crisis, according to original reporting. This isn’t just some seasonal adjustment or a temporary dip. The Bank of Russia has been reducing gold holdings for ten consecutive months.
Gold price, past year$4,048.10 −0.4%
$5,318.40$3,960.50
Oct 2025Oct 2026
You can see the retreat clearly in the numbers. As of September, sovereign gold holdings dropped to 72.8 million troy ounces (2,264 tonnes). It is the lowest level the country has seen since the end of 2019.
It’s a steady leak. Since December 2025, the central bank has liquidated around 62 tonnes of the metal. In September alone, the Bank of Russia reported selling 200,000 troy ounces (6.2 tonnes).
The Great Gold Drawdown
The numbers tell a story of a country tapping into its long-term savings to cover immediate gaps. It’s a reversal of the hoarding seen in years past.
By the end of September, Russia’s remaining gold reserves were worth around $301.6 billion. That’s a significant drop from the $333.5 billion they held a month earlier.
It is a massive amount of capital to move, but the pressure on the treasury seems to be the driving force.
Financing the War Machine
Why sell now? The logic is that Russia is tapping these reserves to plug holes in a widening federal budget deficit. That money isn’t just sitting there. It’s being pulled straight into the gears of state spending.
The math for the Kremlin is getting more expensive. Projections suggest that military and security expenses will account for 38% of total federal spending in 2026.
When such a huge chunk of the national budget is spoken for by defense and security, there isn’t much room left for error. Liquidating gold offers a way to keep that deficit from spiraling out of control.
The China Connection
Money is moving east. It isn’t just about selling metal; it’s about where that metal is heading.
The trade relationship has shifted heavily toward Beijing. Bloomberg reported in July that during the first half of 2025, the value of Russia’s precious metal exports to China nearly doubled.
It isn’t just raw bullion crossing the border, either. China’s imports of Russian precious metal ores and concentrates—gold and silver included—jumped 80% to $1 billion compared to the same period a year earlier, Bloomberg reported, citing Trade Data Monitor and China’s customs office.
The People’s Bank of China has become a central figure in this loop. It has remained one of the leading central bank buyers in recent years, providing a massive, steady vent for Russian supply.
It’s a nuanced shift, though. The original piece argues the increase in gold exports to China is partially attributed to the gold price rally rather than just volume increases.
Market Dynamics and Production
Russia is already a heavyweight here. It sits as the world’s number-two gold producer, trailing only China, with an annual output of over 300 tonnes.
But the domestic market is acting like a sponge, too. In 2024, Russian consumers bought 75.6 tonnes of gold. That’s approximately 25% of everything the country produces in a year.
People aren’t buying it for the jewelry. They’re buying it because they want to protect the value of their savings, leading to record high domestic retail demand last year.
When money loses its grip on value, citizens run to hard assets. You’ve got this domestic hunger for gold hitting at the same time as a global market where spot prices have risen nearly 43% over the last 12 months. For a country needing cash, it’s a perfect storm.
Bullion prices have climbed about 28% this year. If you’re a state trying to fund a massive budget deficit, selling while there’s a price rally is a logical move, even if it feels desperate.
Russia is effectively liquidating its oldest safety net to pay for its newest priorities. The question is how much gold is actually left before that buffer runs dry.