Russia Launches Independent Gold Exchange: An Alternative to LBMA and Step Towards De-Dollarization

Russia is preparing to launch a new trading platform for gold that will operate independently from the London Stock Exchange and the London Bullion Market Association (LBMA). This step effectively severs gold pricing from the dominance of Western financial institutions and is aimed at strengthening the country's financial independence.

New Exchange: Gold Bullion Trading in St. Petersburg

The St. Petersburg International Commodity and Raw Materials Exchange (SPbMTSB), in collaboration with the state-owned company "Goznak," plans to begin trading physical gold in the form of bullion in the third quarter of 2025. Trades will be conducted on a “one lot — one bar” basis in a spot trading environment. Initially, the exchange will offer two types of gold bars: metric bars weighing 1 kg and standard bank bars weighing approximately 12 kg. To facilitate settlements and metal delivery, the exchange is engaging a Supply and Storage Center that is undergoing accreditation by the Bank of Russia to obtain the status of a commodity delivery operator.

Trade Backed by Real Gold

Unlike traditional paper contracts and derivative instruments, the new platform is focused on transactions involving physical precious metals. All contracts executed on the exchange will be backed by actual gold bars stored in certified depositories. Goznak, historically involved in the production of banknotes and securities, acts as a key partner in this project: it will function as the custodian of the bars and one of the sellers of gold on the exchange. This arrangement ensures the timely delivery of precious metals to buyers, allowing them to collect their purchased bars within one business day after the transaction. Regulations for bar issuance are currently being developed, and an accredited delivery operator is expected to manage operational logistics.

Market Participants and Trading Conditions

A diverse range of industry players are invited to participate in the new gold market. Participants will include:

• Large commercial banks
• Gold mining companies
• Refinery plants (companies engaged in the purification of gold)
• Industrial companies that consume precious metals

Initially, trades are expected to occur mainly between legal entities—major market players. This is due to the high value of lots: for example, 1 kg of gold currently costs over 8 million rubles. Therefore, the new mechanism is aimed at institutional and wholesale buyers, while individual investors typically prefer to invest in gold through unallocated metal accounts, exchange-traded funds, or futures rather than purchasing bars directly.

National Pricing Instead of London Pricing

The primary strategic goal of establishing the new exchange is to "disconnect" the Russian gold market from the price benchmarks set in London. Historically, global gold prices have been determined through the London Gold Fixing and LBMA pricing indicators—these benchmarks serve as global reference points for market participants. However, Russia has recently shifted towards creating its own system of price indicators. Representatives of the new exchange assert that they aim to establish national prices for precious metals based on domestic supply and demand, independent of foreign benchmarks. Thus, Russia seeks to lessen the influence of Western financial centers on the valuation of its strategic resources.

Alternative to the Markets of London and New York

The launch of the St. Petersburg Precious Metals Exchange is viewed as an important alternative to Western platforms like the London over-the-counter gold market (LBMA) and the COMEX exchange in New York. Following the imposition of sanctions in 2022, the LBMA excluded all Russian refineries from its list of accredited suppliers, effectively depriving them of the ability to sell gold on the world's largest market. Simultaneously, the European Union banned the import of Russian gold. These restrictions have significantly stimulated the creation of independent infrastructure: as early as 2022, the Russian Ministry of Finance proposed the Moscow World Standard—a new international system for gold trading and certification designed to challenge the dictation of the LBMA. The practical realization of this strategy is represented by the launch of gold trading in St. Petersburg, which will open new avenues for Russian producers and foreign partners from friendly countries to conduct operations with precious metals.

BRICS Countries and De-Dollarization

The independent Russian gold market fits into the broader context of BRICS countries' efforts to diminish reliance on the dollar-based financial system. Russia is one of the world's largest gold producers, and in October 2024, the Ministry of Finance announced discussions with BRICS partners to create an international precious metals exchange. The aim of such collaboration is to ensure "fair pricing" for gold and other metals, promote mutual trade growth, and protect these operations from sanction risks. The new St. Petersburg platform is potentially open to participants from BRICS countries interested in trading actual bars outside the control of Western exchanges. This represents another step toward de-dollarization—transitioning to settlements in national currencies and reducing the dollar's role in global trade. In recent years, central banks of BRICS countries and several other states have been rapidly increasing their gold reserves, diversifying investments, and reducing the share of dollar-denominated assets. The development of a proprietary gold trading infrastructure complements this strategy harmoniously.

Market Impact and Benefits for Investors

The emergence of a new trading platform could eventually lead to the establishment of an independent indicator of gold value in rubles, reflecting the balance of supply and demand in the domestic market. If trading volumes on the St. Petersburg exchange prove significant, the "St. Petersburg" gold price may become a reference point alongside the traditional London fix. For Russian gold mining companies, the opening of this platform means expanded opportunities for selling products at market prices, bypassing Western intermediaries. Investors will benefit from a more transparent mechanism for investing in physical gold within the country. Below are the key benefits that the development of the new gold exchange may provide:

• Reduced Spreads: The exchange format of trading helps diminish the gap between buying and selling prices compared to traditional offline channels (e.g., through banks), enhancing potential investment returns.
• Transparent Pricing: Prices are formed openly based on exchange supply and demand, providing a more objective assessment of gold value without reliance on external indices.
• New Investment Opportunities: The introduction of standardized lots and a liquid market could in the future facilitate the launch of derivative products (futures, exchange-traded funds) based on physical gold, expanding options for investors.
• Financial Resilience: An alternative precious metals market makes the financial system less susceptible to external shocks and sanctions, enhancing the country’s economic security.

Prospects and Significance of the Initiative

The launch of an independent gold exchange in St. Petersburg is a significant step toward financial sovereignty. It demonstrates Russia and its partners' commitment to building their own architecture of international financial relations, where pricing for key commodities such as gold occurs without reference to Western centers. It remains to be seen how actively the new market will integrate into the global system and whether it can attract substantial international liquidity. Nonetheless, the mere fact of the emergence of an alternative platform already creates a precedent: global gold trade is no longer a monopoly of London and New York. In the long term, as ties between BRICS countries strengthen and trust in new mechanisms grows, the role of eastern and southern markets in establishing precious metal prices is expected to increase. For investors, this means expanded opportunities and more diversified paths for investing in gold, and for states, it means enhanced economic security and independence in a changing geopolitical landscape.