“The BSP should devise a better system so it would not lose everything to the smugglers.”
Last week’s news about the BSP unloading 24.95 tons of our gold holdings was as stunning as any news could be. Yet, there was not much local reaction except from one economist who said that the sale was nothing to be concerned about. Had it not been for the World Gold Council publishing the sale on its website, it is most likely that the BSP would have simply remained quiet. As it turned out, we sold the most gold in the world market for the first half of this year.
The BSP came up with a gobbledygook explanation as to why it sold 15.69 per cent of our gold holdings by saying that it was something of an “active management strategy”. What that means, the BSP did not say. Not being an economist, I find it difficult to tangle with the gods at the BSP because they are supposed to be the people who know what is best for the country in managing the country’s coffers. But in this instance, I dare say that this was not a good and necessary move and that is saying it mildly.
Yes, countries do sell some of their gold holdings every now and then but why sell more than a sixth of our holdings? Considering that the 24.95 tons was sold out of the total of 159 tons of our holdings, the BSP definitely owes the public more explanations as to why this was done and what happened to the US$2,360,388,911.382 constituting the proceeds. The amount was computed from the current market price of gold at $2,682 per troy ounce.
More importantly, the BSP must tell the public which country or entity bought the gold. China perhaps? We know for instance, that BRICS countries are buying and hoarding gold to use the commodity to support their currencies in bypassing the US Dollar as the Global Reserve Currency. We also know that China is buying all the available gold that it can.
It used to be that gold was simply an economic commodity. It still is, but in today’s world, many countries seem to view the precious metal in other ways. These countries for example tend to keep the metal instead of selling because they believe correctly that gold can help maintain the stability of a currency. Out of the five founding members of the ASEAN, our currency together with the Indonesian rupiah deteriorated the most over the years. In fact, a simple remark from the US Fed Chairman the other day was enough for our peso’s value to go down against the US Dollar.
Due to the sale, the country has only 134.05 tons of gold left and that is in fact quite surprising. Why? Because the country apparently produces about 40 tons of gold annually and is currently the third biggest gold producing country in Asia after China and Indonesia. Last year however, the country only bought 1.33 tons of gold according to one report. The question again is why buy only 1.33 tons out of the 40 tons produced. What happened to the rest? Smuggled to Hong Kong? I thought that gold produced here can only be bought by the BSP. But if the BSP is not buying everything, shouldn’t it be taking action to prevent the remaining 38 tons from leaving the country illegally? Maybe this is another case of unbridled corruption in our bureaucracy.
