At the rate that Russia has purchased official gold reserves, the European nation logged the largest increase in global official gold reserves purchases over the five year period 2008 to 2012. Russia bought over 500 tonnes of the yellow metal.

China came in second with 454 tonnes and India third at 200 tonnes.

The World Gold Council said that with Russia's aggressive accumulation of gold, the nation played a major role in producing a paradigm shift in the gold market as it transformed for a net seller of gold to a significant net purchaser.

However, it was not only official gold reserves that Russia gobbled up. Consumers also purchased gold jewelry which accounted for 40 per cent of all gold consumption in Russia. With a demand of 76.7 tonnes of gold jewelry, which is 3.9 per cent of the global total, Russia rose to become the fourth largest gold jewelry consumer in the world behind India, China and the U.S.

That translates into a 0.69 grammes per capita total gold demand in 2011, which however pales in comparison to gold jewelry demand among residents of Hong Kong, Taiwan and Thailand.

Most Russians prefer 14-carat gold jewelry which comprises 80 per cent of the domestic gold jewelry market. Moscow accounts for 40 per cent of total sales, retailed mainly by the three major sellers - Yashma, Almax-Holding and Adarnas.

Preference for jewelry type varies by region. Most of southern Russia residents prefer large items such as bulky hollow chains, large rings and pendants, while Siberains opt for gold jewels with delicate designs.

"However, given continued domestic economic growth, there is room for further growth in Russia's demand for gold, especially when considered against a background of rising incomes and a growing middle class," the report said.

As a gold miner, Russia ranks fourth, ahead of South Africa. The council estimates that the Russian gold industry would likely experience further growth in the next 24 years based on estimates that at least 10 per cent of the global gold supply would come from the region.

Reckoned from 2002 to 2011, the report estimates gold demand in Russia grew at an annual average rate of 34.8 per cent. In recent years, Central Bank Russia substantially increased its purchase of gold reserves as part of the bank's strategy to diversify foreign exchange reserves.

In 2011, Russia added 94 tonnes of gold while over the past decade it accumulated 1,300 tonnes of the safe haven metal. In the past three years, Russia bought an average of 10.2 tonnes or 329,583 ounces per month.

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