In Stalin’s Time, Russians Denounced Others to Get Apartments; Now, in Putin’s, They Do So to Get Medical Care They Want

 ‘An Asset No One Can Freeze’ – Russia Renews Its Fascination With Gold

Faced with few options to finance its war on Ukraine, the Kremlin has boosted its gold holdings to record levels, sold on “trade routes” for hard currency. Spot prices have soared.

by John Moretti | December 8, 2024,


The casual, weekend investor may be given pause by this paradox: While inflation in the West is still uncomfortably high, and the US economy is roaring, the spot price of gold continues its historic climb. Normally, as the world’s major economies would heat up, investors would cool on precious metals, as the latter doesn’t yield any interest or dividends, even though it can be relied upon to retain at least some significant value.

Gold, then, traditionally has been seen as a safe harbor in bearish bond and/or equity markets.Why, then, has the price of gold continued an historic rise over the past two years, reaching an all-time high of $2,790.07 per ounce in October, as the world’s largest economy, for one, has boomed at the same time? On March, 20, 2020, $1,488 would buy you an ounce of gold.

At one point on Tuesday, the price sat at $2,675.As those dates might suggest, the Russian invasion of Ukraine is a good place to start digging and panning for answers.For one thing, investors usually flock to gold when geopolitical tensions are high, as certainly was the case when Russian President Vladimir Putin raised the specter of nuclear strikes last month.

“Clearly that has sparked safe-haven interest,” Peter Grant, vice president and senior metals strategist at Zaner Metals, told Reuters in late November.And then, there is the rush on gold from the Kremlin itself.

‘A wake-up call for central banks worldwide’

Last month, the Russian Ministry of Finance announced that it would increase its daily currency and gold purchases by 35.5 percent. Moscow’s gold reserves had already surpassed the $200 billion mark in October for the first time, reaching a record $207.7 billion.

“Since 2022, gold prices have surged 40 percent even as US interest rates were climbing,” Lina Thomas, commodities strategist with Goldman Sachs Research, pointed out on the New York-based investment bank’s blog.

“That is very strange. Typically, higher interest rates make gold less attractive – because gold doesn’t pay any interest, unlike bonds.”After the US and other Western countries started freezing Russia’s central bank assets held in those countries’ financial institutions, that logic was upended.

“That was a wake-up call for central banks worldwide,” Thomas continued. “They began to diversify their reserves away from the dollar and into an asset no one can freeze – and that is gold.” Thomas forecasts that that gold will rise to $3,000 per troy ounce by the end of next year.

So, where does Russia get its gold?

In 2022, Russia was the second-largest producer of gold in the world, tied with Australia at 320 tons mined annually, or 10.3 percent of the world’s production. They ranked just behind China with 330 tons, or 10.6 percent of global share. (The US came in fourth place, behind Canada, with 5.5 percent, while South Africa, the world leader as recently as 2006, had slipped to seventh place that year, with 3.3 percent.)

The largest gold-mining companies in Russia, according to Statista figures from 2021, are: Polyus, one of the world’s largest with about 85 metric tons produced that year, followed by Polymetal International (35 metric tons) and then Kinross Gold, Petropavlovsk, Nord Gold, Uzuralzloto, and others. To get an idea of orders of magnitude, Polyus reported an operating profit of $1.58 billion in the first half of this year.

Those companies mostly sell their gold to Russian commercial banks, such as VTB Bank, MDM, Sberbank, and Gazprombank, the financial arm of the majority state-owned energy company, Gazprom.

They, in turn, sell the gold to the Russian central bank, the Bank of Russia, which owns and manages all of the country’s reserves. It stores two-thirds of its gold in Moscow, in a vault on Ulitsa Pravdy, and the rest in a building in St Petersburg.

A new “gold trade route”

One of the largest problems with the sanctions-laden Russian economy is that the ruble has been fizzling in value, and it has no legitimate access to dollars or euros.

According to US-based think thank, RAND, Russia seems to be “trading gold for hard currency, weapons, and foreign goods, creating a new gold trade route between Russia, Africa, the Middle East, and China,” its analysts wrote in September.

“By the time of Russia’s full-scale invasion of Ukraine in February 2022, it had been acquiring gold at a faster rate than any other country for a decade,” noted John Kennedy, a research leader in the field for RAND.

An executive order from the US president’s office (E.O. 14024) has been in effect since the beginning of Russia’s full-scale invasion, declaring that “persons determined to be responsible for or complicit in, or to have directly or indirectly engaged or attempted to engage in, deceptive or structured transactions or dealings to circumvent US sanctions, including through the use of assets such as gold or other precious metals” are subject to penalty.

Nonetheless, “Moscow is using gold to prop up its wartime economy and bolster access to crucial goods, while holding considerable influence over the production of gold in Central Asia and Africa,” Kennedy wrote.

John Moretti is a freelance journalist and author dividing his time between Europe and the United States. He has also spent more than a decade working with companies that protect travelers from health and security emergencies abroad. His academic background is in Eastern European Studies, international public policy and counterterrorism.

In Stalin’s Time, Russians Denounced Others to Get Apartments; Now, in Putin’s, They Do So to Get Medical Care They Want

    Staunton, Dec. 8, 2024 – The ways in which Stalinism is returning to Russia  are truly insidious. Among the worst is this: In Stalin’s time, Russians denounced others to get their apartments ns joba; now, in Putin’s, they claim doctors have said something against the war in Ukraine if they want them fired and replaced with someone who’ll give them the care they want.
    This type of behavior has been documented by Novaya Gazeta, which observes that “the scariest part” of such actions is that “the state encourages such behavior,” leading patients to record medical appointments or make up charges that have no basis in reality if they don’t like the medical care they are receiving (novayagazeta.eu/articles/2024/12/04/ia-prosto-molchu).
    What is especially disturbing is that this tactic has now led doctors to avoid giving their opinions even among themselves, a pattern that suggests denunciations used to achieve personal goals not just in medicine but in other spheres as well have again become commonplace in Russia today.  

‘Putin doesn’t want a Truce in Ukraine But Might Agree to One for Three Reasons,’ Shelin Says

    Staunton, Dec. 8, 2024  – Putin has enough resources to continue his war in Ukraine for a long time and certainly doesn’t want a truce with Kyiv, Sergey Shelin says; “but he might agree to one” because the war is costing more than he expected, his imperialism is increasingly at odds with the nationalism of the Russian people, and the population itself is tired of war.
    But any agreement the Kremlin leader might make about Ukraine would be no more than a breathing space, allowing him time to gather his forces, and likely guaranteeing that he would restart the conflict when he felt he was in a better position to win it as quickly as he expected in 2022 (moscowtimes.ru/2024/12/06/putin-peremiriya-ne-hochet-no-poiti-na-nego-mozhet-tri-prichini-a149786).
    The costs, human and financial, of the war in Ukraine have been far greater than Putin expected or than the Russian people are comfortable with. Moreover, his imperialist approach is increasingly at odds with the nationalism of the Russian people who want to see investments in themselves and with the attitudes of the population that is increasingly tired of the conflict.
    Consequently, Putin, who doesn’t want to have to work hard to continue his current policy, is “now quite capable of searching for a middle ground between war and peace and could, as a last resort, even sign some kind of agreement to restore his strength and sometime, if everything works out, start again doing” what it might appear he has promised not do.
    In short, Putin might agree to a truce, Shelin concludes; but there is no possibility that he will agree to anything like a peace.