Kremlin turns to gold reserves as war costs rise and revenues fall
Russian Federation sells gold amid war spending and falling revenues (photo: Getty Images)
Russia depletes its gold reserves amid a widening budget deficit, falling oil and gas revenues, and heavy spending on the war against Ukraine. In September 2026, its monetary gold holdings fell to their lowest level since late 2019, according to Ukraine's Foreign Intelligence Service (SZRU).
The agency says Russia's Central Bank reduced its physical gold reserves for the tenth consecutive month in September. Holdings fell by 6.2 metric tons to 2,260. Since December 2025, reserves have declined by around 62 metric tons, or 2.7%.
Meanwhile, Russia's international reserves stood at an estimated $723.5 billion as of October 9. This was $45.5 billion, or 5.9%, less than at the beginning of September.
The dollar value of monetary gold also fell between September and October, dropping from $333.5 billion to $301.6 billion. This reflected both reduced physical holdings and changes in market prices and asset valuations.
Why Russia uses its gold reserves
SZRU notes that the Russian government has been forced to draw on its accumulated reserves as the budget deficit grows. Oil and gas revenues are declining, while government spending, particularly on the war against Ukraine, remains high.
To cover the shortfall, Russia's Finance Ministry sells foreign currency and gold assets from the National Wealth Fund to the Central Bank in exchange for rubles. The central bank then conducts corresponding transactions on the domestic market using Chinese yuan and gold.
International sanctions have further constrained Moscow. Since 2022, a significant portion of the Russian Central Bank's foreign assets has been frozen, leaving domestically held gold and assets denominated in Chinese yuan among the most accessible resources for current operations.
As a result, Russia's total international reserves do not reflect the amount of funds the government can freely access.
What this leads to
Selling reserves lets Russia finance government spending temporarily without immediately increasing borrowing or cutting spending. However, gold cannot fully replace a steady stream of budget revenues.
SZRU warns that if the deficit persists and reserves are not replenished, Russia will have to borrow more, raise taxes, or cut budget programs.
The intelligence agency believes the decline in gold reserves points to mounting financial constraints on Russia, as the war continues to drain state resources amid falling revenues.
Recently, Denmark's intelligence service concluded that the Russian economy was on the brink of a "major crisis" because of the war against Ukraine.
