The mystery surrounding the fate of Argentina’s gold reserves remains open. The country’s Central Bank confirmed on Monday that it sent part of the gold bullion abroad, but to “preserve its security” it did not specify how much was transferred or where. It also did not detail the reason or the operations involved. The movements made, it reported, “do not alter the total volume of gold reserves, which remain equivalent to approximately 4.981 billion dollars.” The secrecy maintained by the Government of Javier Milei prevented dispelling fears about possible embargoes in the context of legal proceedings initiated against the national State by external creditors.
“The Central Bank of the Argentine Republic (BCRA) has successfully completed transfers of part of its gold reserves between its different accounts,” the bank said in a statement. It added that “for more than a decade,” the bank “has maintained the same management options for its gold reserves, both in physical format (bars and ingots) and in electronic format (accounts abroad).” In total, Argentina has almost two million troy ounces of gold.
The official statement also highlighted that “information on the management of the BCRA reserves has always been handled confidentially,” while the auditing and control bodies “maintain access to this information under the same cloak of confidentiality.”
The question of what the far-right government is doing with gold reserves arose last July, when the bank workers’ union, known as La Bancaria, warned about the transfers of bullion. Although the BCRA should be independent of the Executive, President Milei and his Minister of Economy, Luis Caputo, were the first to give some response, also without going into details. Both acknowledged to the press that the gold was being moved and commented that the objective could be to obtain some return or to deposit it as collateral for a loan, instead of having it static in the bank’s treasury. Now the BCRA formally ratified the transfers.
A common transaction in which gold is usually used, explained a former president of the Central Bank, is the sale and subsequent purchase of a certain amount in exchange for a low interest rate, less than 1% per year. Another common transaction is to present gold as collateral for taking out a bridge loan, known in the jargon as a Repo. For this, the bullion would have been sent to the Bank of England, in London, or to the Bank for International Settlements (BIS), based in Basel. In the local market it is presumed that the purpose is to gain liquidity in dollars so that the BCRA can continue to intervene in the financial system – basically, to regulate the dollar exchange rate – as well as to obtain foreign currency to pay import payments and foreign debt maturities. In any case, the profit obtained in the operation should be greater than the logistic costs and the risks of the transfer.
In the absence of official data, the La Bancaria union had submitted a request for access to public information and opposition legislators had demanded that the officials involved explain what was being done with the gold. But the BCRA had rejected the requests and argued that “any data linked to the geographic location could jeopardize the security of these assets, with its consequent impact on the support of the implemented monetary and exchange rate policy, the support of deposits and the security of the financial system.”
On Monday, the Central Bank directly questioned the requests for information and held its authors responsible for the virtual dangers generated: “The BCRA expresses its concern about the irresponsible dissemination of information, for political purposes, related to these operations before their completion because it put the security of the assets of all Argentines at risk,” it warned. Although the Government let it be known that the deposits in London or Basel have sovereign immunity and could not be reached by requests for seizure, the official decision to keep secret where the gold from the reserves was sent opens the door for suspicions about a latent risk.
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