Government to cash in as gold prices hit new record

Portugal has one of the largest gold reserves in Europe with the Bank of Portugal’s 382.6 tonnes valued at €19.8Bn in 2021.

But the expression ‘as good as gold’ is now even better as Portugal’s gold reserves held in vaults nationwide (in Carregdo), in the Bank of England, the Bank of International Payments (BIS), and the Banque de France, as well as some in the United States Federal Reserve have soared in value.

In 2021 gold had already hit a new maximum increasing 4.3%, but in 2022 it increased in value by 19% — a new record — just over US$2,000 an ounce; an amount that analysts say will increase in 2023.
That means that Portugal’s gold reserves are worth around €25Bn. Gold is new trading at a maximum for the past nine months (since April 2021) and has already accumulated a value of 17% since the start of November, but analysts expect a correction in the short term, as the last few trading sessions have indicated.
According to a report by ECO online, on March 7, days after the Russians rolled into Ukraine, gold prices hit US$2,000 per troy ounce — close to the historic maximums it achieved in August 2020.
Gold futures on Comex are currently trading over US$1,900 an ounce, accumulating 5% for 2023.
Analysts say that if the dollar continues to fall as the Fed loosens its tight grip on monetary policy in the coming months, gold may well displace the dollar as the main refuge asset.
At a conference last autumn, Bank of Portugal director Hélder Rosalino pointed out: “Gold is the only reserve asset which doesn’t carry either a credit or political risk”.
By this he meant that gold is a “very liquid asset” that can easily be sold in case of an emergency to “meet government cashflow needs or to undertake exchange operations”.
Portugal has the 14th largest gold reserves in the world, with a total of 382.6 billion tonnes that have not be liquidated in any form since 2006. Taking into account current market prices, these reserves are valued at €25Bn, or just over 10% of the country’s GDP.
The Bank of Portugal made a gain of €109 million over the past four years from financial instruments related to gold stocks.