Portuguese Gold Sale Urged by Senior German Lawmakers as Mexican Central Bank Buys 100 Tonnes.
Senior German Lawmakers Urge Portuguese Gold Sale
Another sign of the increased appreciation of gold as an important asset came from Germany today where Angela Merkel’s budget speaker and his opposition counterpart have urged Portugal to consider selling their gold.
Norbert Barthle, Germany’s governing coalition budget speaker and his counterpart Carsten Schneider from the Social Democrats, the biggest opposition party, urged Portugal to consider selling some of its gold reserves to ease its debt problems. They called for a review of Portugal’s request for financial aid to include gold and other potential asset sales.
The German lawmakers did not specify who should buy the gold from the Portuguese central bank but given the challenges facing Germany and the Eurozone, it is likely that the Bundesbank and the ECB would be willing buyers – if the gold is not already encumbered due to Portugal’s membership of the Eurozone.
Interestingly, there was an article in the Times of London on Monday suggesting that the Portuguese gold reserves (worth some $20.7 billion at today’s prices) be used to fund their bailout
and this Via Bloomberg, (empahsis ours):
Portugal, Spain and Greece all have large central bank gold reserves that have not so far been tapped, despite their precarious financial situation. Some economists and gold traders believe that they should sell part of their reserves to reduce the bailout burden on taxpayers in other parts of Europe.
Portugal has one of the biggest gold stashes in Europe, with 382.5 tonnes worth $US20.7bn. Its gold reserves equal 9 per cent of GDP, the highest of any European country. This month Portugal agreed a bailout from the European Union worth up to 80 billion euros ($108.4bn) as it struggles with debt equivalent to 92.9 per cent of GDP. It became the third country after Greece and Ireland to seek a bailout.
Most measures of a country’s debt ignore the value of gold holdings, but the scale of reserves held by Portugal, Spain and Greece has called into question whether they should be utilised to ease their debt crisis.
