Dip in gold reserves is strategic trading – Central Bank

The Bank of Guyana (BoG) has defended its decision to sell off portions of Guyana’s gold reserves, saying the move was reflective of “strategic trading”.
In a statement on Thursday, Central Bank clarified that it trades gold and replenishes the stock based on market opportunities. The bank noted that gold is not managed as an exclusive reserve asset for holding, but as part of a portfolio of assets.
“Gold may be sold for a number of reasons; including maximising profits, rebalancing of the portfolio, meeting liquidity needs, or optimising opportunities in other asset classes. With the price of gold as high as US$1364 recently, the bank has been trading gold as any bank worth its salt will do,” BoG posited.
To this end, it added that “Dips in the reserves therefore, reflect strategic trading rather than any involuntary disposal of gold.”
As such, the Central Bank assured that the benchmark for the holdings of international reserves are vigilantly adhered to and upheld. It further stated that the domestic market has an excess supply of foreign currency to meet domestic demand while maintaining a stable foreign currency exchange rate.
On Wednesday, <Guyana Times reported that the bank’s latest Statement of Assets and Liabilities reflecting that the bank’s total assets are on a slide, with several indices ranging from the bank’s gold holdings to its market securities showing reductions when compared to previous years.
According to the recently released bank document, its total assets as of March 28, 2018, were $206.4 billion. This includes $1.9 billion in gold reserves, $82.1 billion in capital market securities and $5.6 billion in money market securities.
This is a reduction from the gold reserves the bank recorded in June 2017. According to the bank’s Half Year Report last year, it had $4.8 billion worth of gold in its foreign holdings as assets.
Indeed, the gold reserves have steadily been declining with each passing year. At the end of 2016, the bank had $7.4 billion in gold, while at the end of 2015 the gold reserves stood at $14.2 billion. At the end of 2014 the bank of Guyana had $25 billion in gold as assets.
In the case of total assets, that has also seen a marked decrease. At the end of 2014, total assets were $207.9 billion. It reduced in 2015, being recorded at $188.7 billion in December of that year, before recovering by 2016 year end and being recorded at $220 billion. At June 2017, total assets were $221.8 billion, before the drop recorded in this year’s figures. While the practise of countries selling the gold it held in reserves is not uncommon, observers are worried whether the State received the best price the world market could offer. At present, gold prices are approximately US$1350 per ounce.