The Central Bank began its first sales of physical gold from its reserves as part of the finance ministry’s efforts to fund the budget deficit. With gold at record high levels, this is more lucrative than selling off Russia’s new reserve currency, the Chinese yuan.
- Gold sales take place within the framework of the government’s rule for managing assets from the National Welfare Fund (NWF). While oil export revenues are falling (which they have been throughout 2025), the finance ministry sells liquid assets from the NWF to raise rubles. After the invasion of Ukraine and imposition of sanctions, the Chinese yuan and gold are the last two remaining liquid assets Russia has in its arsenal.
- Unlike the yuan, which the Central Bank sold on the market, all gold transactions up until now have been virtual: the government did not sell on the market, and the Central Bank kept the actual metal in its vaults. As a result, Russia’s overall gold reserves (not just the NWF sovereign wealth fund) topped 2,300 tons and are the fifth largest in the world. The Central Bank has not sold its gold on the domestic market, only bought it. But now things have changed.
- Before the invasion, the NWF itself had accumulated 405.7 tons of gold. Since then, more than half (232.6 tons) has been sold to cover budget spending. On Nov. 1, 2025, there were 173.1 tons of gold in the fund. The total volume of NWF liquid assets, in either gold or Chinese yuan, has fallen 55% to 4.165 trillion rubles (about $52 billion). In relative terms, the volume of liquid assets has plunged from 7.3% of Russia’s GDP before the war to 1.9% today. This is due not only to active drawdowns, but also to the nominal strengthening of the ruble.
Why the world should care
Selling off gold is not an indication of a crisis or a panicked attempt to patch holes in the budget. Instead, it’s a rational move from the Central Bank. The fund’s assets must be sold to compensate for lower oil revenues. At the same time, the bank clearly does not want to burn through its yuan reserves. Selling currency from the fund, along with some flexibility over timing, is the bank’s only remaining tool to smooth over currency fluctuations, given how low market liquidity is due to the exit of foreign investors. Meanwhile, gold prices are rising on higher demand due to steeper inflation and general market uncertainty. Therefore, selling off physical gold is a logical step. If this had happened before sanctions, it might have impacted global gold prices. But since Russia is excluded from any price fixing and cannot sell on world exchanges or export any of its gold, world prices are unlikely to be affected.
Selling yuan, however, could create problems on both sides: it risks pushing the ruble to a level that is too strong to support the budget, while also running into weak demand, since Russian companies already hold plenty of yuan and would not be willing buyers. A telling sign of that is the government’s plan to issue Eurobonds denominated in the Chinese currency to create an outlet for the corporate stash.
