Sitting on Nazi gold: The extraordinary truth behind Portugal’s gold reserves

What would you say if you realised that far from being one of Europe’s poorest countries, Portugal is sitting on a massive gold pile? Worth in excess of €13 billion on the open market, it is the world’s second largest gold reserve in relation to the country’s Gross Domestic Product and has increased in value by €1.4 billion in just one year.
The 383-tons of gold bullion stored away in the Bank of Portugal as the country staggers through its third year of fiscal austerity, could so easily have been sold to help pay the country’s debts.
Indeed, European politicians suggested as much only two years ago – yet the Bank of Portugal pointed to a law that says any proceeds from sales cannot be transferred to the state treasury.
That is particularly worrying when you discover that at the time of the Revolution, Portugal owned 866-tons of gold.
Where has 483-tons of it gone in the last 40 years?
And before we look for the answers to that one, how did Portugal come to amass so much gold when it has always been regarded as one of the barefoot sisters of Europe?
This is where the story gets even darker.
The gold in those vaults in Lisbon came in large part from the Germans during WWII.
As historian and journalist Neill Lochery writes, the Germans looted it from the vaults of the central banks of Europe, and later from the victims of the Holocaust.
In other words, the gold stolen in one of the worst atrocities of the last century is now just sitting under lock and key, apparently benefiting no-one.
In an article on Bloomberg’s website dating back to 2010, journalist João Lima – under the heading “Gold ignored” – writes: “A Bank of Portugal official in Lisbon declined to comment on the management of the gold reserves, as did a Finance Ministry spokesman in the Portuguese capital”.
Inexplicably, a strategist with Commerzbank AG in London, told Lima: “With the increase in the price of gold, you have some nice book gains, but you can’t cash them in.
“It’s a buffer for an extreme-case scenario”.
So a country mired in debt – with a deficit reported to be rising by as much as 14 million euros per day – is obviously not considered an extreme-case scenario?
Who makes these decisions?
It is stories like these that make you wonder at the real truth behind global financial crises and the workings of world governments.
As last weekend’s report on the increase in Portugal’s gold reserves probably raised very little interest among Portuguese families watching the evening news, the truth as to how this country amassed so much wealth is spectacularly played down.
The trump card was wolfram – a rare ore almost uniquely mined in Portugal that was used to harden steel, and was thus a vital component to the German armaments industry.
Wily dictator António de Oliveira Salazar realised that if he sold Portugal’s wolfram for money, the Nazis would be more than likely to use forged notes, so he demanded gold, and the lucrative trade continued right up to the eve of D-Day.
Initial post-war efforts by the Allies to assess the exact quantity of gold that Portugal had received – “and to persuade Lisbon to return it, soon ran into trouble”, Lochery writes, with Salazar and later Mário Soares (1999) claiming it had been received in payment for “legitimate trade” with the Germans, and would therefore be staying right where it was.
Writing in the Wall Street Journal earlier this year, Neill Lochery focused on “Portugal’s Golden Mystery” highlighting the fact that the search for Nazi gold could soon peter out as World War II generations die.
Stressing that there is “no time like the present” for “a major international commission of inquiry, led by the Americans, to investigate the Nazi gold trail”, he writes that Portugal’s wolfram dealings were seen as having been “critical” in sustaining the Nazi war effort.
“For reasons he kept to himself” though “Salazar chose not to use the gold to help develop the backward Portuguese economy”, Lochery adds.
“Following the revolution in 1974, Portugal’s new democratic leaders have also been reluctant to sell or speak of the Nazi gold”.
Yet, as we heard last weekend in the national media, Portugal’s reserves are doing very nicely, thank you.
Lochery queries: “Despite the recent falls in the value of gold, did the country really need the multi-billion euro bailout in the first place?”
It is another question to add to the whole golden mystery.
As to the destiny of some of the 483 billion shaved off 1974 reserves, João Lima writes that: “The Bank of Portugal has said it sold batches of the metal every year from 2003 to 2006 under an agreement between European central banks that caps gold sales”, while Neill Lochery’s research showed that “some of it was allegedly used to help alleviate the social (and political) costs of Portugal’s programme of economic liberalisation during the 1980’s”.
Why those situations were considered “extreme case scenarios” when the current financial crisis was not, is anyone’s guess. But as Lochery stresses, the real issue here is the source of the Nazi gold.
“A new investigation would offer the survivors and the relatives of the victims of the Holocaust one last chance for justice”, he says. “At present, this is a story without an end”
… and a huge pile of gold going nowhere in a Portuguese bank vault.
NATASHA DONN, written September 29 2014