El Salvador utilized its gold reserves to improve the economy
In March, 2015 the Central bank of El Salvador surprised the whole world market with the selling of the historical figure 80% of its international gold reserves. The operation, according to Reuters agency, was the exchange of the 80% which is equivalent to nearly 5 500 tons of gold, for which the country received $206 million.
The objective of the smallest country in Central America is to diversify risks with this money and take advantage of the recent increase in gold prices, even though the major part of the money has no specific destination, according to the declarations of a Central bank official.
The government of the country also foresees volatility in markets which could be saved with the cash received. Moreover, the Central Bank has expectations of growth in the economy by 2.8 per cent, comparing to the 2.2% of 2014, given the fact that the money could improve the private consumption. The recovery of US economy and the low prices of oil have always encouraged the country to sell their gold reserves.
The Chief of the Risk Analysis in El Salvador Central bank, Roberto Arevalo, was upbeat about the gold selling stating that they accumulated gold for 15 years and they can protect the country against the previously mentioned volatility, and pay the interests of the debt – nearly $15 800 million, equivalent to 60% of the GDP.
Despite this optimism, experts wonder whether this has been the best moment to carry out this operation. Gold prices are in a good position, but they depend upon many factors in the world market which could boost prices even more by the end of the year, and later, as gold is a well-known asset profitable in the long run.
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Category: Gold news Publication date: 2015-04-28 12:16
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