Putin's "financial blunder" shakes the market: Freezing assets in exchange for peace? Gold safe-haven buying recedes.
2026-01-22 13:41:49
Russian President Vladimir Putin proposed on Wednesday (January 21) to use the country’s assets frozen in the United States to fund two key initiatives: rebuilding conflict-ridden Ukraine and contributing to a peace fund proposed by US President Donald Trump.
The proposal involves donating a potential $1 billion from frozen funds to Trump's "Peace Committee," with the remainder earmarked for Ukraine's reconstruction after a peace treaty is signed. Putin stated that the proposal has been discussed with the US and is on the agenda for his meetings in Moscow with Trump's special envoys Steve Vitkov and Jared Kushner.
This proposal is widely seen as a diplomatic tool to prevent further economic sanctions—while utilizing funds that the Kremlin currently cannot access.
This proposal sends a clear signal that the conflict may be heading to the negotiating table, and the marginal easing of geopolitical risks may weaken immediate safe-haven demand for gold in the short term. Spot gold traded lower in Asian trading on Thursday, currently hovering around $4795 per ounce, down about 0.7% on the day.
During a meeting with the Russian Security Council, Putin elaborated on the specifics of his proposal. He said, "Even before we resolve the issues of joining the Peace Council and its operation, given the special relationship between Russia and the Palestinian people, I believe we can allocate $1 billion from Russian assets frozen during the previous US administration to the Peace Council."
The Russian leader added, "Our remaining assets frozen in the United States can also be used to rebuild areas damaged by fighting after the signing of a peace treaty between Russia and Ukraine."
Putin also intends to discuss the $1 billion donation with Palestinian President Mahmoud Abbas, with whom he will soon meet.
Trump's proposed Peace Council is a core part of his 20-point plan for peace in Gaza , which requires countries to pay at least $1 billion for a permanent seat.
Despite the significant political implications of this proposal, its financial scale is limited. It is estimated that Russia holds assets in the United States worth only $4 billion to $5 billion.
This amount represents only a small fraction of Russia's total frozen assets worldwide, estimated at $300 billion, most of which are located in Europe. Furthermore, the available funds pale in comparison to the costs of rebuilding Ukraine.
As of February 2025, the total cost of reconstruction and support over the next decade is estimated at approximately $524 billion, and this figure continues to rise as the conflict damages more infrastructure.
The proposal comes as Russia tries to avoid harsher U.S. sanctions on its economy and trading partners. The Russia-Ukraine conflict has lasted nearly four years, with little indication that the situation will be resolved.
President Trump's stance on the conflict has been inconsistent, sometimes blaming Putin and other times accusing Ukrainian President Volodymyr Zelensky of undermining peace. He has also threatened to impose tariffs and sanctions on Russia's trading partners.
Moscow and Kyiv remain deeply divided on any potential peace agreement. Russia continues to insist that Ukraine must relinquish territories it currently does not control as a prerequisite for any agreement. As the conflict enters its fifth year, attacks on key energy infrastructure by both sides have contributed to the stalemate.
In an interview, U.S. Special Envoy Steve Vitkov stated that talks with Russian President Vladimir Putin are scheduled for later Thursday, with "land" being a central issue in the negotiations on Ukraine. Vitkov said, "Very much progress has been made in the last six to eight weeks."
" Jarid and I are expected to meet with the Russian side on Thursday evening ," Vitkov said at the World Economic Forum in Davos, Switzerland. He confirmed that Putin would attend the talks and noted that the talks were proposed by the Kremlin.
Vitkov stated that negotiations regarding the US-led 20-point peace plan are progressing. He said, "We are pushing all parties to narrow their differences... and hope to have positive news soon. We are fine-tuning and coordinating our 20-point peace plan. Currently, the focus of negotiations is on the land deal issue—which has always been the elephant in the room. I think we have very, very good ideas on this, and I hope to make progress on this issue."
When asked if he believed Putin would reach an agreement to end the nearly four-year-long Russia-Ukraine conflict, Witkov said, "I believe so. I sense that all parties are eager for peace, and the time is ripe."
This proposal sends a clear signal that the conflict may be heading to the negotiating table, and the marginal easing of geopolitical risks may weaken the immediate safe-haven demand for gold in the short term .
In the long run, regardless of the outcome of this proposal, it has exacerbated the politicization and fragmentation of the global financial system , shaking the foundations of sovereign credit assets. This provides the most solid structural narrative for the long-term rise in gold prices—gold is no longer merely a tool to combat inflation or seek safe haven, but also a hedge against the "loss of the security attributes of the global financial system."
The market needs to closely monitor the negotiation process, as it is a key barometer for judging the direction of the situation. Until the outcome becomes clear, the market is expected to remain highly volatile.
(Spot gold daily chart, source: FX678)
At 13:41 Beijing time, spot gold was trading at $4799.74 per ounce.
The proposal involves donating a potential $1 billion from frozen funds to Trump's "Peace Committee," with the remainder earmarked for Ukraine's reconstruction after a peace treaty is signed. Putin stated that the proposal has been discussed with the US and is on the agenda for his meetings in Moscow with Trump's special envoys Steve Vitkov and Jared Kushner.
This proposal is widely seen as a diplomatic tool to prevent further economic sanctions—while utilizing funds that the Kremlin currently cannot access.
This proposal sends a clear signal that the conflict may be heading to the negotiating table, and the marginal easing of geopolitical risks may weaken immediate safe-haven demand for gold in the short term. Spot gold traded lower in Asian trading on Thursday, currently hovering around $4795 per ounce, down about 0.7% on the day.
Details of Putin's proposal
During a meeting with the Russian Security Council, Putin elaborated on the specifics of his proposal. He said, "Even before we resolve the issues of joining the Peace Council and its operation, given the special relationship between Russia and the Palestinian people, I believe we can allocate $1 billion from Russian assets frozen during the previous US administration to the Peace Council."
The Russian leader added, "Our remaining assets frozen in the United States can also be used to rebuild areas damaged by fighting after the signing of a peace treaty between Russia and Ukraine."
Putin also intends to discuss the $1 billion donation with Palestinian President Mahmoud Abbas, with whom he will soon meet.
Trump's proposed Peace Council is a core part of his 20-point plan for peace in Gaza , which requires countries to pay at least $1 billion for a permanent seat.
Financial Realities and Diplomatic Posture
Despite the significant political implications of this proposal, its financial scale is limited. It is estimated that Russia holds assets in the United States worth only $4 billion to $5 billion.
This amount represents only a small fraction of Russia's total frozen assets worldwide, estimated at $300 billion, most of which are located in Europe. Furthermore, the available funds pale in comparison to the costs of rebuilding Ukraine.
As of February 2025, the total cost of reconstruction and support over the next decade is estimated at approximately $524 billion, and this figure continues to rise as the conflict damages more infrastructure.
Geopolitical background
The proposal comes as Russia tries to avoid harsher U.S. sanctions on its economy and trading partners. The Russia-Ukraine conflict has lasted nearly four years, with little indication that the situation will be resolved.
President Trump's stance on the conflict has been inconsistent, sometimes blaming Putin and other times accusing Ukrainian President Volodymyr Zelensky of undermining peace. He has also threatened to impose tariffs and sanctions on Russia's trading partners.
Moscow and Kyiv remain deeply divided on any potential peace agreement. Russia continues to insist that Ukraine must relinquish territories it currently does not control as a prerequisite for any agreement. As the conflict enters its fifth year, attacks on key energy infrastructure by both sides have contributed to the stalemate.
Subsequent meeting agenda
In an interview, U.S. Special Envoy Steve Vitkov stated that talks with Russian President Vladimir Putin are scheduled for later Thursday, with "land" being a central issue in the negotiations on Ukraine. Vitkov said, "Very much progress has been made in the last six to eight weeks."
" Jarid and I are expected to meet with the Russian side on Thursday evening ," Vitkov said at the World Economic Forum in Davos, Switzerland. He confirmed that Putin would attend the talks and noted that the talks were proposed by the Kremlin.
Vitkov stated that negotiations regarding the US-led 20-point peace plan are progressing. He said, "We are pushing all parties to narrow their differences... and hope to have positive news soon. We are fine-tuning and coordinating our 20-point peace plan. Currently, the focus of negotiations is on the land deal issue—which has always been the elephant in the room. I think we have very, very good ideas on this, and I hope to make progress on this issue."
When asked if he believed Putin would reach an agreement to end the nearly four-year-long Russia-Ukraine conflict, Witkov said, "I believe so. I sense that all parties are eager for peace, and the time is ripe."
Analysis of the impact on the gold market
This proposal sends a clear signal that the conflict may be heading to the negotiating table, and the marginal easing of geopolitical risks may weaken the immediate safe-haven demand for gold in the short term .
In the long run, regardless of the outcome of this proposal, it has exacerbated the politicization and fragmentation of the global financial system , shaking the foundations of sovereign credit assets. This provides the most solid structural narrative for the long-term rise in gold prices—gold is no longer merely a tool to combat inflation or seek safe haven, but also a hedge against the "loss of the security attributes of the global financial system."
The market needs to closely monitor the negotiation process, as it is a key barometer for judging the direction of the situation. Until the outcome becomes clear, the market is expected to remain highly volatile.
(Spot gold daily chart, source: FX678)
At 13:41 Beijing time, spot gold was trading at $4799.74 per ounce.
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