The G7 Ban on Russian Gold and What That Means to You

Posted - July 20, 2022
The G7 Ban on Russian Gold and What That Means to You

The recent G7 ban on the importation of Russian gold seems like a smart play as it comes to further limiting Putin’s ability to finance his war against Ukraine. The effort also serves to further isolate Russia from the global economy by preventing it from dealing in the gold market. Clearly, it’s an unusual if not unprecedented step and many wonder how it all might play out in the long term.  

So, the question remains: how will this ban affect you, your gold investments and the worldwide precious metals market? Some experts predicted a very telling wrinkle in the short term. Have you been affected already?

This Was Not the First Ban on Russian Gold Since the Invasion of Ukraine

There are obvious reasons for the ban. Clearly, this is a political jab, a way of depriving Russia of additional revenues from exporting its gold which is not only used for investing but also in the creation of jewelry and other industrial processes. And yet, the G7 gold ban is not the first of its kind since Russia’s invasion of Ukraine. 

This past March, the Bullion Market Association in London, a big hub for the international gold market, suspended trade with six Russian silver and gold refineries. A statement from the UK supported the effort citing that gold is a major Russian export and that their sanctions would be the first of its kind implemented against Russia and that it would have a big impact on Putin’s ability to wage war.

The Overall Market Response Following the G7 Ban on Russian Gold

Though the expectation might be that the price of gold would be quickly affected, the market’s response was tepid at best. While the U.K. was first to suggest that their ban would have ‘global reach’, it barely moved the meter. Even after the G7 follow-up ban was enacted the price of gold bullion ticked up a bit, but the gains were soon marginalized as gold and gold bullion went about not caring much for the politics of it all. 

“Prices may have received a little initial support from the news, but most analysts said the sanctions are unlikely to have a longer-term impact,” Bloomberg writers Ranjeetha Pakiam and Eddie Spence added.

So, it would appear as though it’s mostly business as usual for gold and gold bullion investors. The short and long of it is that precious metals, such as gold, remain a solid choice for long-term investment as it continues its sometimes bumpy but historically consistent rise in value. And, of course, as most seasoned investors know, gold and other precious metals hedge well against inflationary periods.

So, if you’re an active investor or someone who wants to leap into the market, hold to the idea that even politically motivated gold bans, such as the G7 ban on Russian gold, won’t hamper or affect the overall price of gold. Sure, investors would love to see some upward volatility, but the good race is always to the tortoise and not that unpredictable hare. Simply put, gold’s reputation, like the metal itself, cannot be tarnished. 

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