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Can gold deflect Western economic attacks? The Kremlin thinks so.

Russia's Central Bank has been buying up huge quantities of gold – 55 tons in the third quarter alone – as a means to pad the economy against Western sanctions' bite.

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    An employee displays a gold bar at a gold refining plant in the town of Verkhnyaya Pyshma, outside Yekaterinburg, Russia, last month. The Russian Central Bank has been buying massive quantities of gold to help buttress Russia's economy against Western sanctions.
    Maxim Shemetov/Reuters
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Russia has been quietly stockpiling gold to insulate its national treasury against outside attacks, such as sanctions and asset freezes, as economic war with the West heats up, a report released Thursday by the World Gold Council suggests.

The Kremlin has been building up its supplies of the precious metal for the past decade in response to deepening global financial instability. But amid escalating Western sanctions over Russia's alleged interference in Ukraine's civil strife, official Russian agents bought up a whopping 55 tons of gold in the third quarter of this year alone, or about 60 percent of all purchases by national banks.

"This was driven by a number of factors including a continued diversification away from the US dollar and the backdrop of ongoing geopolitical tensions," the report says.

Experts say the amount of gold in Russia's treasury has tripled to over 1,000 tons in the past decade, rising faster in recent months as the Kremlin stealthily unloads dollars in favor of more traditional assets. Russia now has the world's fifth largest gold stockpile, after the US, Britain, France, and Italy.

"The more gold a country has, the stronger will be its sovereignty," the online business journal Vzglyad quoted pro-Kremlin Duma deputy Yevgeny Fyodorov as saying Friday.

Russia's gold hunger is likely to grow in future, since Russia's Central Bank has concluded that Western sanctions are likely to remain in place until 2017 at least.  Kremlin-connected analysts say they don't believe the economic measures against Russia are just about what's going on in Ukraine and fear it's part of a wider US-led effort to bring down the regime of Vladimir Putin.

According to the Central Bank, Russia's total foreign reserves stood at about $430 billion at the beginning of this month. Of that, about $45 billion was in gold, a considerable increase in the gold-to-currency ratio of Russia's reserves compared to just a year ago.

Mr. Putin personally ordered the shift into more gold several years ago, when the metal's market price was $495 per ounce. Experts say that turned out to be a pretty good bet, since even though the price has been falling lately – despite all the international tensions – gold is still worth about $1,150 per ounce these days.

It's not just about making a profit, but also protecting Russia from outside shocks, says Alexander Razuvayev, chief analyst at the Moscow branch of Alpari, a leading foreign exchange broker.

"Bigger gold reserves allow the Russian Central Bank, which has acted wisely in times of crisis, to be ready to handle any more stressful situations," he says.

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