More doubts about the Central Bank’s gold: the banking union assured that bullion was sent to London again

Pedestrians walk past the Central Bank building in Buenos Aires (REUTERS/Enrique Marcarian)

The Central Bank would have made another shipment of gold bullion of the reserves abroad in order to use them as collateral for a bank loan and to generate interest on these stocks, something that the union has been publicly denouncing The Banking. They estimate that after the last transfer of gold to London, the monetary authority would have moved to the British capital about USD 1 billion.

The guild that leads Sergio Palace He warned in a new request for access to public information submitted to the entity he presides over Santiago Bausili In the last few hours there was a new shipment of gold via a flight from Ezeiza to London. The transfer, which is not the first according to sources with knowledge of the matter, can only be limited to a few USD 250 million per trip for reasons of insurance coverage offered by the airline.

The question of gold holdings and what the BCRA does with these stocks raised doubts about how the central authority handles its metal reserves following the request for public information from the banking union. For the moment, any physical movement of the bullion has no impact on the reserves and gold account on the bank’s balance sheet, since it is only a move for the moment.

The union led by Sergio Palazzo warned in a new request for access to public information presented to the entity chaired by Santiago Bausili that in the last few hours there was a new shipment of gold via a flight from Ezeiza to London.

“The movement of gold is a matter of efficient reserve management. You can have them physically or in storage. If they are physically held, they are immobilized.. If they are in the BIS, you can earn some interest on the deposit, leverage it, make it liquid via collateral or sell it,” he said. Infobae two weeks ago based on sources with knowledge of the matter.

The use of metal in the hands of the entity and, in particular, its transfer abroad has generated controversy in recent years every time the subject was discussed. The truth is that it is not something that has been implemented now. The official response of the monetary authority was that “it is working on the response to that request, which will be provided according to what is established in the regulations.”

According to La Bancaria, yesterday Monday the primary deadline for 30 days for the response to the request expired but the entity communicated that it will use the 15 day extension more to make an official replica official.

BCRA President Santiago Bausili and Argentine Economy Minister Luis Caputo (REUTERS/Matias Baglietto)

The Minister of Economy, Luis Caputohad confirmed days after the note of Infobae that the Central Bank of the Argentine Republic (BCRA) made those Shipments abroad as part of a strategy to manage international reserves “more efficiently”. In statements to LN+ Caputo had said: “It is a very positive move by the Central Bank because today there is gold in the bank, which is like having a property inside and you cannot use it for anything.” “On the other hand, if you have that gold outside, you can get a return on it and the country needs to maximize the returns on its assets,” the official said.

In April, the BCRA had reported that it had completed the cancellation of the debt with the BIS, which amounted, when Milei took office, to USD 3.117 million in a swap for which Argentina gave up gold. That is why the path to request liquidity again is paved.

According to La Bancaria, yesterday Monday the initial 30-day deadline for the response to the request expired but the entity announced that it will use the 15-day extension to formalize an official response.

The BCRA has 1.98 million troy ounces gold, which were valued at around USD 4.5 billion according to the latest official data published by the BCRA. In many analyses, this asset is subtracted from the Central Bank’s liquid reserves because it is assumed that it has little use in supporting operations in the foreign exchange market and as a backup for the bank’s liabilities.

According to three people who have or have had in the past responsibility for such operations, consulted by this newspaper, to use gold reserves as foreign currency holdings requires a very simple procedure. It is enough to sell them in exchange for cash or, even easier, to take out a loan in dollars with gold as collateral, which in the jargon is known as a swap. The operation, of course, has an interest rate as its cost.

However, there is a time limit depending on where the physical gold is located. Most of the 1.98 million ounces are in the country, in the Treasury of the Central Bank. The rest, meanwhile, are in London and Basel (BIS).