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. Last Updated: 07/27/2016

Russia Stops Exports of Gold

Russia, which has been selling less and less of its gold abroad, announced plans Wednesday to stop exporting the precious metal altogether within the next few months.

A senior official of the state Precious Metals Committee, the only body allowed to export gold, said it would be much more profitable to sell it on the growing domestic market.

"We will set up a mechanism before the end of the year under which it will be unprofitable to sell gold abroad but it will pay to sell it all domestically," said Valery Skripchenko, head of the committee's scientific and technical department.

Russia, one of the world's biggest gold producers, has traditionally kept a tight grip on exports. Under communism, it was illegal to possess bullion.

The first attempts to create a domestic market came last December with a decree from President Boris Yeltsin paving the way for establishing a Russian Gold Exchange and granting commercial banks the right to handle gold operations.

Earlier this year some banks started receiving licenses to trade gold within the country. More than 30 are now authorized to deal. Exports, however, remain the prerogative of the committee.

Skripchenko said Russia was selling gold abroad at $12.5 per gram, while the domestic price was currently $30 to $40 a gram.

"We will sell all our gold inside the country at a price of about $20 a gram," he said. "This will bring much more profit both to producers and to the budget."

Russia has traditionally exported gold to help finance its budget deficits. Export and production figures have in the past been cloaked in secrecy and Skripchenko said he was not authorized to give the latest data.

But committee chairman Yevgeny Bychkov told a news conference in May that exports in the first five months were only 6.6 tons, compared with 21 in the same period of 1993.

The committee is overseeing plans to set up a Gold Club of Russia, bringing together representatives of the Finance Ministry, the Central Bank, authorized commercial banks and the committee.

The Gold Club is envisaged as a cross between a lobby group and a watchdog organization. It first aim would be to issue gold-bearer certificates, a highly liquid security backed by gold.

Any physical or legal entity would be allowed to trade in the security.

Producing organizations would also be allowed to trade in gold within Russia. But the state would maintain control over both production and exports.

Bychkov said in June that Russia might produce 150 tons of gold this year, with 35 percent of this amount likely to be exported. In May, he said Russia's gold output could rise by 1 1/2 by the year 2000 if investment was forthcoming.