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By Emin Aliyev | TREND

The claim that Azerbaijan is being used as a route for Russian gold to reach Western markets, based solely on a comparison between gold production and export volumes, fails to take into account the structure of the country’s state reserves and requires additional evidence.

Russian political commentator Vyacheslav Shiryaev told Deutsche Welle that, amid sanctions, Russian gold is reaching Western markets through intermediary countries and that Azerbaijan has allegedly recently been used for this purpose.

As his main argument, Shiryaev cited the discrepancy between Azerbaijan’s gold production and export volumes. According to him, the country produces around three tonnes of gold a year, while it exported around 24 tonnes in six months.

However, the fact that exports exceed current domestic production does not, in itself, indicate the re-export of Russian gold. Such a conclusion requires an analysis of the origin of the exported metal, the structure of reserves and transactions involving gold assets.

In Azerbaijan’s case, one of the key factors is the State Oil Fund of the Republic of Azerbaijan (SOFAZ), which has built up a gold portfolio over many years as part of its investment strategy. As of 30 September 2025, SOFAZ’s gold sub-portfolio stood at around 184.8 tonnes. This means that the amount of gold held by Azerbaijan’s state institutions is significantly greater than the country’s annual domestic production.

This is crucial when assessing export statistics. Gold exported by a country during a particular period does not necessarily have to have been mined in the same year. It may represent an investment asset acquired previously. The sale of part of such reserves is also a normal asset-management operation. State funds and central banks around the world purchase gold when prices are relatively low and may sell part of their accumulated holdings when the market value of the asset rises substantially.

Azerbaijan has publicly outlined such a strategy. President Ilham Aliyev said at the beginning of 2025 that the country had taken a strategic decision to increase its gold reserves.

“Last year, we also took a strategic decision to increase the country’s gold reserves. We clearly saw geopolitical developments, and I was absolutely certain that the price of gold would rise. And it has skyrocketed,” the Azerbaijani President said on 5 January in an interview with local television channels.

Emphasising that the decision had generated significant returns for Azerbaijan, he said: “Thanks to increasing our gold reserves, our State Oil Fund earned more than US$10 billion from this alone. But if the price falls, of course, our reserves will decrease. So our reserves are changing every day now. Today, they are probably US$84 billion or US$83 billion. Tomorrow, they will be US$85 billion. Nevertheless, these are among the highest reserves per capita in the world.”

SOFAZ has previously purchased gold on international markets, including in London, when prices were significantly lower than current levels. As prices subsequently rose, selling part of the accumulated portfolio became one of the instruments available for managing state assets.

This practice is not unique to Azerbaijan. State funds and central banks in various countries regularly adjust their gold holdings depending on investment strategies, market conditions and reserve-management requirements. In recent years, gold transactions, including sales of accumulated holdings, have been carried out by countries including Kazakhstan, Uzbekistan, the Philippines and Singapore. International statistics from the World Gold Council show that gold holdings in these countries can change substantially from year to year: central banks can be major buyers or sellers depending on market conditions.

The experience of Kazakhstan and Uzbekistan is particularly illustrative, as both are major gold producers while also actively managing their official gold reserves. Therefore, comparing domestic gold production with exports, without taking into account transactions by central banks and state funds, does not automatically establish the origin of the exported metal. The same approach should therefore be applied to Azerbaijan.

Another issue is the selective approach to assessing such trade flows. Since 2022, Armenia’s trade turnover with Russia has exceeded US$10 billion, while Armenia’s exports of precious metals, which had remained at minimal levels before 2022, increased sharply. International trade statistics show that exports of precious and base metals from Armenia recorded multiple increases during certain periods in 2023–2024. At the beginning of 2024, monthly exports of precious metals exceeded US$1.1 billion. Such a sharp increase formed part of the broader expansion of Armenia’s trade with Russia after 2022 and has repeatedly been examined by international analysts in the context of changing trade flows.

Against this backdrop, claims that Azerbaijan is allegedly being used to re-export Russian gold require particularly careful scrutiny. If a specific scheme is being alleged, evidence should be provided regarding the origin of the metal, its suppliers, routes, ultimate buyers and the relevant customs transactions.

A difference between production and exports alone is insufficient to support such a conclusion. Professional analysis of international gold trade must take into account not only production, but also accumulated reserves, transactions by state funds, imports and exports, changes in the value of holdings and the structure of buyers.

In Azerbaijan’s case, the existence of a substantial SOFAZ gold portfolio is a publicly known fact. Therefore, export volumes exceeding current domestic production do not, by themselves, constitute evidence that the country is being used as an intermediary.

Former Iranian ambassador to Azerbaijan Mohsen Pakayin previously told Trend that the economic and trade relations between countries in the region should be considered in a broader context. However, such links must be assessed on the basis of verifiable data.

For Azerbaijan, the issue also has a broader economic dimension. The state’s reserve-management strategy provides for asset diversification, while gold has remained one of the instruments of that diversification in recent years. The sharp rise in global gold prices has increased the value of the state’s accumulated assets. Gold-portfolio transactions may therefore reflect normal investment management and do not require an explanation based on unsubstantiated intermediary schemes.

In this context, Vyacheslav Shiryaev and Deutsche Welle should clarify the specific data on which the claim that Azerbaijan is being used to channel Russian gold to Western markets is based. In particular, it would be relevant to know whether the author has data on the origin of the gold exported by Azerbaijan, its suppliers and ultimate recipients, and whether SOFAZ’s transactions involving its gold portfolio were taken into account when preparing the material.

Until such clarification is provided, the claim that Azerbaijan is being used as a channel for the re-export of Russian gold remains an allegation rather than an established fact. Amid changing global trade flows and the growing role of gold as a reserve asset, it is particularly important to distinguish statistically verifiable facts from interpretations. In Azerbaijan’s case, the publicly available data point to the existence of a substantial state gold portfolio and a long-term investment strategy, both of which must be taken into account when analysing export figures.

Emin Aliyev is the Editor-in-Chief of TREND News Agency in Azerbaijan