Portugal has the largest ‘external’ gold reserve in the world
PORTUGAL MAY be struggling economically to increase its productivity and competitiveness on the European stage, but when it comes to gold reserves the country is positively glittering, according to results released last week by the World Gold Council, in conjunction with the Bank of Portugal.
When it comes to pure weight in gold, Portugal is up there with the big boys. Leading the way is the US with around 8,100 tonnes, but Portugal’s 417 tonnes places it 11th, sandwiched in the league tables between Taiwan (423 tonnes) and Russia (386 tonnes).
However, Portugal is the country with more gold stashed away externally in the world than any other. A massive 80 per cent is secured in foreign vaults, with the remaining 20 per cent rumoured to be held in huge underground vaults somewhere beneath Lisbon’s Parque das Nações.
According to a source at the Bank of Portugal, the price of the gold is valued daily on the world’s markets and, even with recent sales, there has been no overall reduction in the country’s external reserves. This is because when gold is bought or sold on the markets at a high price, depending on fluctuations, the country has shored up considerable interest, which can be used to buy back gold reserves when the price is more favourable.
In 2002, the Bank of Portugal sold 15 tonnes of gold, while in 2003 the government sold off a further 15 tonnes to help plug the budget deficit, meet the European Union’s debt target and pay interest rates on external foreign borrowing.
However, Bank of Portugal Governor, Vítor Constâncio, has denied that the sale of gold reserves had anything to do with shoring up the former PSD government’s ailing economic fortunes. Instead, the Bank of Portugal said that the sales were “part of a medium-term plan, which envisaged an alteration in the composition of external gold reserves owned by the central bank.”
It added that, at that time, the metal was seen as a low profit asset of limited financial viability and, having such high reserves was of little value in the long term, when it could be translated into more lucrative assets.
Since 2003, Portugal has sold off 205 tonnes of gold, bagging the country a total of 507 million euros in hard cash.
Over the decades, Portugal has always betted on gold reserves to shore up a crisis. Even when the Portuguese economy flagged between 1939 and 1968, Salazar made sure that the country had ample gold reserves, even though children went to school without shoes on their feet in some districts ….
