Argentina ships gold bars abroad to be financially certified

(Bloomberg) — Argentina’s central bank sent some of its gold reserves abroad in recent weeks to be validated for financial use, a move that could give the country much-needed flexibility, according to people with knowledge of the matter. directly in this field.

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Once certified, the gold could eventually be used as collateral to obtain financing, according to one of the people, who asked not to be identified discussing private information. Before the move, about half of Argentina’s gold was in domestic vaults and the other half in London, another person said.

Officials at the central bank, known by its Spanish acronym BCRA, declined to comment on the issue.

The monetary authority separately confirmed on Monday that it had sent gold between its accounts, citing both domestic and foreign accounts. However, the bank did not say how much of the nearly $5 billion in gold was shipped, for what reason or where.

Bank officials also criticized what they called “irresponsible” reports of gold going abroad, stressing that management of the reserves had always been kept confidential.

The newspaper Page 12 published a video on August 19 of a truck emblazoned with the BCRA logo driving down the highway, reporting that it was on its way to Buenos Aires’ main international airport with $250 million worth of gold bullion.

The gold maneuvers highlight the long-term challenges facing Argentine President Javier Milei. Perilously low international reserves are hampering his ability to lift currency controls and raising investor concerns about his administration’s ability to service its debts.

Economy Minister Luis Caputo said last week that the government would pay off debts due in January 2025 but would not seek new international financing until early 2026.

It is unclear how Caputo and Central Bank Governor Santiago Bausili will use the gold that was transferred abroad to be certified. But the economy minister has already said the government is negotiating a special purchase vehicle or repo agreement with commercial banks.

To be considered valid for financial use, gold must meet the standards set by the London Bullion Market Association. Once certified, the bars can be traded freely between institutions within the market, according to the LBMA website.

Argentina’s central bank has more debt than cash, a problem known as net negative reserves. The red balance sheet has long fueled investor distrust of the peso and kept most sovereign debt below 60 cents to the dollar, although it has risen since Milei took power last year. Net reserves currently stand at about $6.9 billion, according to local brokerage Portfolio Personal Inversiones.

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The central bank already used some of its gold during Federico Sturzenegger’s tenure as head of the institution from 2015 to 2018. At that time, he carried out futures operations to earn a profit on some of his gold reserves.

Caputo defended sending the precious metal overseas in a July interview with local TV channel LN+. “If you have gold overseas, you can get a return – and the country needs to maximize the return on its assets,” he said.

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