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Russians are buying so much gold amid the ruble's collapse that the central bank halted its own purchases from banks

Gold bullion bars are pictured after being inspected and polished at the ABC Refinery in Sydney on August 5, 2020.
Gold bars. Photo by David Gray/AFPPhoto by David Gray/AFP
  • Russia's central bank is suspending purchases of gold from banks amid increased consumer demand.

  • Russians have sought gold as a way to preserve wealth as the ruble tumbles to historic lows.

  • Western companies have pulled out of the country and sanctions have crippled the economy.

Russia's central bank is pausing its gold purchases from banks as the ruble's collapse and Western companies' exit from the country spurs increased demand from Russians for the precious metal.

According to a report from Reuters, the central bank said household demand for physical gold bars has increased following the "abolition of a value-added tax on these operations." Russians have been seeking safe havens for their wealth since the country's attack on Ukraine spurred widespread economic sanctions and the subsequent collapse of the ruble — which is now worth less than a penny.

The central bank's pause on gold buying follows the announcement just last month that the financial authority would resume purchasing of the precious metal after commercial banks in the country faced sanctions from the West in response to the attack on Ukraine. According to Bloomberg, Russia is the fifth largest owner of gold globally.

Now, gold has become one of Russians' last safe havens to preserve their wealth. Previously, some Russians had been buying up luxury items like watches and other jewelry as a store of value to defend against the ruble's tumble to historic lows.

Putin's forces attacked the eastern European country last month, sparking international backlash. The US and European Union have since banned exports of luxury goods to Russia — among a bevy of other sanctions that have rattled the country's economy — and many Western companies have stopped doing business there, leaving Russians with little else to turn to besides gold. The price of the yellow metal has surged since the beginning of the year and is now up 6.5%.

Read the original article on Business Insider