The dilemma facing investors reflects Russia's heft in the global bullion trade and its hub, the London market, where gold worth around $50 billion changes hands daily in private deals.
in early March – does not apply to hundreds of metric tons of gold that has been sitting in commercial vaults since before the conflict started.
A rapid sell-off of gold from Russia – a top three supplier – would potentially disrupt that trade by undermining the principle that all bars in the London trading system are interchangeable regardless of their origin, according to three senior bankers at major gold trading banks. He said his phone lit up with calls after the London Bullion Market Association , a trade body that sets market standards, removed all Russian refineries from its accredited list on March 7, meaning their newly minted bars could no longer trade in London or on the COMEX exchange in New York, the biggest gold futures trading venue.
To hammer home the point that pre-invasion Russian gold was meant to be treated the same as gold from other places, some banks told clients for whom they stored gold that they would have to pay extra to offload Russian bullion because it would breach their existing contracts, the two bankers, a third banker, and two gold-owning investment funds said.
The LBMA, which is made up of gold refiners, traders, and banks, is not a regulator, and relies on market participants to uphold its rules. The FCA, the British regulator responsible for overseeing the banks and traders in the London gold market, declined to comment. “Our ETFs are not able to get all Russian metals off their books at short notice,” said a spokesperson for Zürcher Kantonalbank.
At least $12 billion worth of Russian gold is stored in vaults in London, New York, and Zurich, according to a Reuters analysis of data from 11 large investment funds. The total amount is likely significantly larger but there are no publicly available figures to quantify it.
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