(Kitco News) As Russian investors embrace gold this year, local banks face shortages of smaller troy-ounce gold bars.
The surge in demand comes after Russia scrapped the 20% value-added tax on metals purchases back in March and then got rid of the 13% income tax on the sale of gold for 2022-2023. The move was designed to encourage diversification into precious metals over foreign currencies, such as the U.S. dollar and euro.
The main issue with the current shortage is that Russian refiners are used to supplying banks with large ingots for bulk purchases, as this was the main investment focus in the past, Vedomosti reported. Refiners are already working to shift the production to smaller-sized minted bars, but it is not a quick transition and will take time.
Before the surge in demand from the local population, gold was primarily bought in bulk by the Russian central bank to be exported abroad. That is why refiners’ main objective was to produce large bars.
Plus, it was cheaper for refiners to produce 12 kg ingots versus smaller ones that are popular with individual investors, said Promsvyazbank’s director of the private capital department Evgeny Safonov. The most-in-demand gold bars with individual investors have been minted bars up to 1 kg in weight.
www.kitco.com/news/2022-11-02/Russian-banks-face-gold-bar-shortages-as-local-demand-surges.html