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Posts Tagged ‘Gold Reserves’

Europe’s Elusive Gold Reserves: Are Greece, Portugal Sitting on Billions of Dollars?

Posted by Ram Kumar Shrestha on July 4, 2011

By Daniel Eckert and Holger Zschäpitz / Die Welt / Worldcrunch

This post is in partnership with Worldcrunch, a new global-news site that translates stories of note in foreign languages

Jonathan Nourok / Getty Images

into English. The article below was originally published in Die Welt.

The first thing any insolvent private person is forced to do is relinquish the family silver. But other rules seem to apply to governments. Whether they’ve been living above their means for a few years or for decades, certain countries hold on tight to their assets, declare themselves unable to pay back their debts and turn to other countries for help.

The European Union has seen many an example of this. Right now, Greece is negotiating with the troika of the E.U., the European Central Bank (ECB) and the International Monetary Fund (IMF) for a new rescue package while Athens sits on an impressive 114-ton stash of gold, about what four large, fully loaded trucks could carry.

The gleaming bars in the vaults of the Greek central bank are worth $5.8 billion. If Athens were to sell that gold, the Greek state would theoretically be able to meet at least part of the debt payments due soon without any outside help.(Read how the Greek economic crisis is threatening the euro.)

Another country in crisis, Portugal, also holds a significant amount of precious metal dating back to the days of António de Oliveira Salazar’s regime. Instead of aid, Lisbon could have converted its $19 billion worth of gold into cash.

Nick Moore, chief commodities strategist at the Royal Bank of Scotland in London, reports that a question often asked by bank clients is why these governments don’t sell some of their gold. After all, it is recognized worldwide as an asset that can be sold even in tough economic times. The gold in the central banks of euro-zone members is altogether worth some $545 billion.

With that, 4.5% of Euroland’s $12 trillion public debt could be paid off in one fell swoop. In relation to its debt, Portugal is particularly gold rich. Lisbon could put 383 tons of it on the market and make $19.3 billion at the present rate. Read the rest of this entry »

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