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Sale Of El Salvador’s Gold Reserves Confuses Analysts

By Kitco News
Tuesday April 28, 2015 9:15 AM

(Kitco News) - According to recent data from the International Monetary Fund (IMF), El Salvador sold about 80% of its gold reserves last month.

The IMF data shows that, in March, the El Salvador central bank sold 5.412 tonnes of gold for $206 million, depleting its gold reserves from its previous holdings of 6.8 tonnes.

In a Reuters article, an official from the central bank said that the sale was to help diversify its risk and take advantage of appreciating gold prices. However, many analysts, including those at Commerzbank, were puzzled by reasons behind the sale.

“The country’s official currency is the U.S. dollar, in which the gold price is a long way off its highs,” they said in a report Tuesday.

Although El Salvador was the biggest seller last month, official purchases still remain positive as the data confirmed that Russia purchase of 30.53 tonnes of gold, its first purchase of the year. Kazakhstan also added 2.29 tonnes of gold to its reserves.

According to Commerzbank this is the 30th consecutive month that Kazakhstan has added to its official holdings. Analysts at Barclays also noted in a recent report that year-to-date, net central banks purchases are more than 40 tonnes, an increase of more than 5% compared to net purchases of 38 tonnes during the same time in 2014.

Analysts are expecting emerging central banks to continue to be net purchases of gold as they continue to diversify their foreign reserves away from U.S. dollars.


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By Neils Christensen of Kitco News; nchristensen@kitco.com
Follow Neils Christensen @neils_C

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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