The mystery of the missing gold. This is not the title of a detective novel, but rather the controversy surrounding the management of the gold reserves of the Central Bank of the Argentine Republic by the far-right government of Javier Milei. The Banking Association has warned against the sending abroad of reserves of bullion worth up to 1.5 billion dollars (about 1.35 billion euros). The destination of the gold and whether it is sufficiently protected against possible seizure by third parties is uncertain.
The Central Bank has refused to provide information on this public asset. It argues that “any data related to the strategic location” of the said securities “could endanger the security of these assets.”
The Banking Association’s secretary general, center-left MP Sergio Palazzo, had requested access to the information and, after his request was denied this week, fears grew that gold reserves would be sent without a bailout. “They are trying to hide what they are doing with the gold outside,” Palazzo said in a television interview.
The union leader of the Peronist coalition Frente de Todos recalled that four gold shipments had already been detected, the first two in June. “They explained to me that so many shipments are made because of an insurance problem in air transport, which would be limited to a maximum amount of 300 million dollars for each flight. Therefore, if it is verified that there was a fifth shipment in recent days, we would already be in the order of 1.5 billion dollars transported abroad.” This represents “a third of the Central Bank’s total international gold reserves,” he explained. According to the Banking Association, the Central Bank has about 4.7 billion dollars in gold.
A few weeks ago, Economy Minister Luis Caputo confirmed that the gold in the Central Bank’s reserves had been sent abroad, without specifying to what extent or where. Caputo described the move as “very positive.” “Today, you have gold in the Central Bank, it’s as if you had a property inside that you can’t use for anything. On the other hand, if you have it outside, you can get a return,” said the star minister of Javier Milei’s ultraliberal government.
Public Information Requests
Palazzo explained through the social network “There is an error in the response, they invoke security reasons for the reserves whose geographical location cannot be indicated; and that giving this information could endanger the banking system. It is ridiculous,” said Palazzo.
“Furthermore, I asked you to inform me at which meeting of the Board of Directors the resolution was taken, what intervention the control agencies had, what means of transport were used and what insurance was taken out to guarantee the transferred asset and for what purpose the transfer of the asset was made of gold. They could have bypassed the geographical location and given me the rest of the information. If they do not give the answers, it is because they are hiding them or because they have no way of explaining it.
For her part, the senator of the Unión por la Patria, Juliana Di Tullio, presented another request for public information and a note to the Minister of Economy “demanding explanations on the transfer of Argentines’ gold assets abroad.”
Caputo responded aggressively through social networks And the senator responded: “The donkey is the one who does not know the difference between a request for public information, which is the one that goes to the BCRA, and a note, which is the one that goes to the head of the economic sector. That is, to the donkey. When we summon him to the Senate, I want to see if he tells me to my face what he tells me in a tweet.
The risks
Horacio Rovelli, an economist and former bank employee, points out to elDiario.es the possible consequences of sending reserves out of the country. “A relevant issue is the risk of seizures due to existing or emerging lawsuits, whether due to receivables or debts. the nationalization of [la petrolera] YPF. To cite a relevant fact: YPF shares are worth $13 billion and the vulture fund Burford Capital is seeking $16 billion from Argentina in the ongoing trial in the Southern District of Manhattan.
“If the operation involves the Central Bank getting rid of gold, it would go against what the world is doing, especially various Asian countries, such as India and China, which are increasing their gold reserves. It is necessary for the government to clarify the reasons for the transfer of gold and avoid negotiations that involve financial and legal risks,” adds the professor of economics at the University of Buenos Aires.
It has been speculated that the bullion would be used to facilitate the sale of an asset to a financial institution with the latter’s commitment to resell it to the original owner and at a certain price. This is a form of loan but with the temporary transfer of the asset as collateral, in this case the gold in the reserves. The problem is that if at the indicated date the country is not able to pay the repurchase of the gold, the financial institution could keep it. If this were the case, the operation of releasing the bullion would have been carried out in the greatest secrecy.
