The Real Reason Why Middle East Is SUDDENLY Buying Tons Of Gold From Russia
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Gold has always been a symbol of wealth and power, But did you know that the world's attention is now focused on a new gold rush happening right now in Russia and the UAE?
With Russia being the world's third-largest gold producer and the UAE being a major hub for gold trading, the two countries have formed a unique partnership that is changing the global gold market.
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Since the war started in Ukraine and the Western countries put sanctions on Russia, something interesting happened. The United Arab Emirates stepped in and became a major center for trading Russian gold.
You see, Russia couldn't use its usual export routes anymore, so they turned to the UAE. According to records from Russian customs, there were almost a thousand shipments of gold since February 2022.
This information comes from a detailed report by Reuters. Between February 24, 2022, and March 3, 2023, the UAE imported a whopping 75.7 tonnes of Russian gold. Can you believe it? That's worth a staggering $4.3 billion! And get this, in 2021 they only imported 1.3 tonnes. So you can see how much things have changed.
But the UAE isn't the only place buying Russian gold. China and Turkey are also big players. Each of them imported around 20 tonnes during this period. When you add it all up, these three countries accounted for almost all of the gold that Russia exported.
So why did the UAE become the new gold hub? Well, when the war broke out and the Western countries put sanctions on Russia, many banks and companies stopped dealing with Russian gold. It used to be shipped to London, the center for gold trading and storage.
But now, since March 7, 2022, the London Bullion Market Association banned Russian gold. But here's where it gets really interesting. Russian gold found new markets in countries that didn't follow the Western sanctions.
Turkey, in particular, had a kind of mixed attitude about it. And you know what? Some experts believe that Russian gold could be melted and sold in the US and Europe without anyone knowing where it came from. Sneaky, right?
Now, let's shift our focus to the UAE for a moment. While the UAE is widely recognized for its modernity and open-mindedness, it is worth acknowledging that like any other place, it has its complexities.
Beyond the realm of gold and oil trading, the UAE, like any busy hub, sees a diverse range of activities taking place. The UAE's Gold Bullion Committee, which is a government organization, has assured that the UAE has strict procedures in place to combat illegal goods, money laundering, and dealings with sanctioned entities.
They have emphasized their commitment to honest and transparent trade, in accordance with international norms established by the United Nations. To put pressure on Russia, the United States has cautioned several countries, including the UAE and Turkey, that they might lose access to G7 markets if they engage in business with entities subject to US sanctions.
However, experts found no obvious violations in the transactions related to Russian gold, indicating that they were conducted within legal boundaries. According to Louis Marechal, a consultant at Metals Focus, Russia produced approximately 325 tonnes of gold in 2022.
Russian customs records indicate annual exports of 116.3 tonnes in the past year, It means that the remaining amount either stayed within Russia or was shipped out without being officially documented. Ultimately, it is impossible to determine the exact quantity of gold Russia actually exported.
Meanwhile, the UAE is already a significant exporter of bullion and jewelry, and its thriving gold industry has experienced further growth. Trade data reveals that the UAE has imported an average of about 750 tonnes of pure gold each year from 2016 to 2021.
Russian gold constituted only around 10 percent of the total imports. To entice buyers, Russian bullion was recently sold to the UAE at a discounted price, approximately 1 percent lower than the global benchmark.
A shipping company manager, who wished to remain anonymous, mentioned that most of the gold transported to the UAE by his company was destined for refineries, where it would be melted down and reshaped.
Since customs records only indicate the shippers or traders involved in the transactions, without revealing the ultimate buyers, such as refiners, jewelers, or investors, Russian gold could end up anywhere, including Europe, without facing the risk of penalties for violating sanctions.
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