Portugal earns €109M from gold

Portugal has earned €109 million from its gold reserves without selling a single ingot because it has cleverly applied them as a financial instrument.

According to an exclusive from ECO, Portugal is the country that has the 14th largest gold reserves in the world.
The Bank of Portugal has been actively managing its gold portfolio through the derivatives market. The Portuguese central bank has been “particularly active in the swaps market since 2016 and has enjoyed good returns” said one of its directors, Hélder Rosalino at an international conference in Lisbon.
“These operations enable complex financial instruments to be employed to achieve revenues from precious metals without selling a single bar.
According to the Bank of Portugal’s activity reports, the income had been made between 2018 and 2019, a period in which it managed to make a accumulated gain of €109 million. These contracts enable the institution to receive interest in exchange for the gold bars without the gold actually going anywhere.
“Around half of our gold reserves that are held in the Bank of England, the Bank of International Payments (BIS) and the Bank of France are available to be used for investment in London and in Paris precisely with the aim of “obtaining future yields” says the bank’s accounts report.
The lion’s share of Portugal’s gold is held in its deposit in Carregado and can also be used as futures.
And while since the War in Ukraine gold has lost 10% of its value against the US dollar, gold has still been outperforming shares and bonds. It is the only asset that has no credit or policy risk.
Central banks now hold more than 35,000 metric tons of the metal, about a fifth of all the gold ever mined. The US Federal Bank has the most gold (8,000 tonnes), followed by Germany (3,371 tones), Italy (2,451 tonnes), France (2,436 tonnes) and Russia (1,909 tonnes). The UK has 310 tonnes.