Bipartisan Bill: Block Russia's Gold Reserves, US May Halt Oil Imports

The sanctions against the Russian Federation are hitting the Russian nation and its businesses, financial and payment systems, and citizens alike hard. More and more nations and institutions are lining up to impose sanctionsand deeper and broader sanctions appear to be on the way.

Russia has been on a mission to de-risk its reliance on the US dollar used in the country’s foreign trade, reducing its dollar holdings and looking towards the Chinese yuan, the euro and gold. However, there are no signs that Russia may be using cryptocurrencies.

As a result, Russia has one of the largest gold reserves in the world and most of it is deposited within Russia. It may be the last straw the Russian economy hangs on. Russia holds about $132 billion in gold reserves.

Bill would apply secondary sanctions to any American

As a measure to cut this last significant straw, a bipartisan bill is being introduced in Congress, as reported by Axios. The bill introduced by Sens. Angus King (I-Maine), John Cornyn (R-Texas), Bill Hagerty (R-Tenn.) and Maggie Hassan (DN.H) would target Russia’s ability to sell its reserves of gold. The bill would apply secondary sanctions to any US entity that knowingly transacts or transports gold from From Russia central bank holdings, or sell gold physically or electronically in Russia.

The goal of the bipartisan bill is to include the legislation in the general spending bill that lawmakers hope to pass on Friday.

“Russia’s massive gold supply is one of the few remaining assets that Putin can use to prevent his country’s economy from falling further. By sanctioning these stockpiles, we can further isolate Russia from the world economy and increase the difficulty of Putin’s increasingly costly military campaign,” Senator Angus King said in a statement.

“Russia has taken a page out of Venezuela’s book by exploiting a loophole in current sanctions that allows them to launder money through the buying and selling of gold,” said Senator Cornyn.

“The United States and our allies must stand firm in the face of Russian aggression and ensure that we block any loophole Putin has to evade the full weight of our sanctions,” Senator Hassan said.

US seeks to unilaterally ban oil imports from Russia

Parallel to the presentation of this bill, the US seeks to ban oil imports from Russia, even without the participation of its European allies, which are highly dependent on Russian energy, especially natural gas.

Germany, the biggest buyer of Russian oil, has rejected plans to ban energy imports. Germany is accelerating its plans to expand its use of alternative energy sources, but it cannot stop Russian energy imports overnight, German Chancellor Olaf Scholz said on Monday.

The United States is much less reliant on Russian crude and products, but a ban would help push up prices and hurt American consumers who already see rising prices at gas stations.

The market price of oil has soared to its highest level since 2008, in part due to delays in the possible return of Iranian crude to world markets and as the United States and its European allies consider banning Russian imports.

Congressional leaders are speeding up legislation

President Joe Biden held a video conference with the leaders of France, Germany and the United Kingdom on Monday as his administration continues to seek their support for a ban on Russian oil imports.

The White House is also negotiating with US congressional leaders who are working on fast-track legislation that would ban Russian imports, a move that forces the administration to work on an accelerated schedule, a source said. Reutersspeaking on condition of anonymity.

A senior US official, also speaking on condition of anonymity, told Reuters a final decision had not been made, but “it would probably just be the US if it happens.”

It remains to be seen how these measures will affect the market prices of bitcoin, other cryptocurrencies, or even gold if the measures are implemented. It goes beyond saying that if the gold bill is enacted and proven to be effective, large amounts of gold will be pushed out of the global market for the time being. All things being equal, less supply generally means higher prices.