The increase in the value of the dollar in 2018 saw a hike in the price of gold. For Portugal this ‘hike’ took the value of reserves up very nicely by another 481 million euros.
This is a story that belies the bottom line.
Last time the Resident wrote at any length about Portugal’s gold reserves – and their extraordinary history – the amount of gold languishing in the vaults of the central bank was given as 383 tons (click here).
Now (nearly five years later), reports trumpeting the increased value of the stash say the country has only 382.5 tons.
Granted it’s only a half a decimal point in difference, but when this refers half a ton of gold, that’s suddenly quite a lot to ‘disappear’.
Says Dinheiro Vivo, “the Bank of Portugal once again did not dip into the reserves, which are some of the largest in the world.
“As in previous years, the quantity of gold held by the Bank (382. tons) did not alter”.
Again, this is not the whole picture.
It is well documented that at the time of the Revolution (April 1974), Portugal owned 866-tons of gold.
Toppled dictator Salazar had chosen never to spend it, and since then, according to historian and journalist Neill Lochery, Portugal’s democratic leaders have also been reluctant to sell or speak of the gold.
Lochery was writing during the years following the last economic crisis, wondering out loud whether the country had ever really needed the €79 billion bailout that it has been paying dearly for ever since.
Portuguese journalist João Lima also wondered this back in 2010, and was told that the reserves could only be used as “a buffer for an extreme case scenario”.
This rule however did not stop the Bank of Portugal from selling some of the country’s gold off in batches between 2003 and 2006 “under an agreement between European central banks that caps gold sales” (says Lima), while Neill Lochery claims research shows that “some of it was allegedly used to help alleviate the social and political costs of Portugal’s programme of economic liberalisation during the 1980s”.
Today, Dinheiro Vivo is not putting its hand up to anyone messing with the 383 tons. It just isn’t 383 tons anymore, it’s 382.5 – and thanks to the increase in gold’s value on the open market, the upwardly revised worth of Portugal’s reserves has now reached a staggering 13.783 billion.
This news comes on the day the ‘impossibly expensive’ demands from teachers – to win back pay frozen for almost a decade – have been resoundingly vetoed in parliament, following the Socialist government’s threat that it would resign if forced to spend an extra 600-800 million euros per year as ‘the money simply isn’t available’.
Reports focusing only on the increase in the value of Portuguese reserves stress this tiny country holds the 12th largest gold stash in the world.
For those who haven’t clicked on the link within the text, the provenance of the gold is not in any way glittering.
It came from Nazi Germany, during World War II, in payment for wolfram – a rare ore at the time uniquely mined in Portugal and a vital component in the German armaments industry.
The gold was ‘stolen’ by the Nazi regime from the vaults of European central banks and later from victims of the Holocaust.
