The war in Ukraine has highlighted a little-known element of Russian economic policy over the last twenty years, which aims to increase, through multiple and continuous purchases, the stock of national gold held in the vaults of the Bank of Russia.

This gold reserve (as in all countries) is set up in order to secure transactions, credit agreements or to constitute a guarantee fund. 

Thus, an international standard has been established in Russia for gold trading: the Moscow World Standard or MWS. This is the best alternative to the London Bullion Market Association (LBMA). According to the Russian Ministry, this structure will standardise the operation of the precious metals sector.

Moscow's global standard to break free from LBMA's hegemony over precious metals prices

Russia is proposing a global standard for gold, silver and platinum prices to break free from the hegemony of the London-based Precious Metals Market Association. The latter is accused by Moscow of manipulating prices to its advantage and the Moscow exchange hopes that this standard will put an end to this practice, among others.

In addition, Russia is seeking closer ties with its partners in order to reduce the use of the dominant currencies (US dollar, euro and sterling). Seizing independence in metal brokering would be a major turning point. It should be remembered that Eurasian countries produce the majority of the world's gold and that Russia holds the largest gold reserve, a further step towards the de-dollarisation of the Russian economy.

Earlier this year, Russia set the price of gold in roubles in March 2022. This is a clear objective to de-dollarise the Russian economy and the creation of a gold and metals market standard would be the logical next step.

Russia therefore has several interests in establishing a new gold market standard. These include setting the price of gold in relation to the Russian rouble, increasing the value of the Russian rouble and increasing the size of Russia's gold reserves. The country is also trying to promote the use of the Russian rouble in international trade.

Gold price kg in rubles ?

As part of this conflict, which is also intended to be economic, Moscow has decided that all trade, whatever its nature, will no longer be conducted in euros or dollars but in roubles. 

Russia thus wants to form a new market for gold bullion that will be regulated by the countries that control the resources of these metals. This is a new revolution! On the basis of this, the Kremlin wants to improve the bilateral exchange system in national currencies and exclude the dollar, the pound sterling and the euro in favour of the Russian rouble.

Referring to the few statistics related to the world gold supply, one can discover that the US and other countries, allies of Ukraine, produce 22% of the world's gold. 

While in our liberal economies the bullion price of gold may fluctuate slightly twice a day in the quotations set by the ICE Benchmark Administration on the London Stock Exchange (LBMA), elsewhere it may not. These fluctuations are inherent to inflation, but also to interest rate movements, the law of supply and demand...

On the Moscow side, with a strong central power and a caporalist economy, the price of gold is fixed and frozen by the Kremlin via the Russian Central Bank.

As a result, Russia is proposing a global standard for gold, silver and platinum prices, in order to break free from the hegemony of the London Precious Metals Market Association.