Greece and Portugal are sitting on tons of gold
July 1st, 2011
11:00 AM ET

Greece and Portugal are sitting on tons of gold

Editor’s Note: The following article was originally published in Germany's Die Welt. English versions of their articles, and others from top global media, are produced by

By Daniel Eckert and Holger Zschäpitz

The first thing any insolvent private person is forced to do is relinquish the family silver. But other rules seem to apply to governments. Whether they’ve been living above their means for a few years or for decades, certain countries hold on tight to their assets, declare themselves unable to pay back their debts and turn to other countries for help.

The European Union (EU) has seen many an example of this. Right now, Greece is negotiating with the EU-European Central Bank-International Monetary Fund troika for a new rescue package — all the while Athens sits on an impressive four-million-ounce (125 U.S. tons) stash of gold, about what four large, fully-loaded trucks could carry.

The gleaming bars in the vaults of the Greek National Bank are worth 4 billion euros. If Athens were to sell that gold, the Greek state would theoretically be able to meet at least part of the debt payments due soon without any outside help.

Another country in crisis, Portugal, also holds significant amounts of precious metal dating back to the days of António de Oliveira Salazar’s regime. Instead of aid, Lisbon could have converted its 13 billion euro's worth of gold into cash.

Nick Moore, chief commodities strategist at the Royal Bank of Scotland (RBS) in London, reports that a question often asked by bank clients is why these governments don’t sell some of their gold. It is after all recognized worldwide as an asset that can be sold even in tough economic times. The gold in the central banks of Eurozone members together is worth some 375 billion euros.

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With that, 4.5% of Euroland’s 8.3 trillion euros public debt could be paid off in one fell swoop. In relation to its debt, Portugal is particularly gold-rich. Lisbon could put 383 tons of it on the market and at present rates make 13.3 billion euros.

And if Europe sold off all its gold?

The issue is particularly volatile because the Portuguese just squeezed an 80-billion-euro aid package out of the EU. The reason given for the aid request was that the country wouldn't get fair conditions from capital markets, but needed money to pay back outstanding loans. With the money they would have gotten from selling gold, they would have been able to pay back a large part of an older debt they've been carrying which is due this year.

By comparison with the rest of Europe, Lisbon is hoarding disproportionately large quantities of gold. No other country has that much precious metal in their foreign exchange reserves. During the Euro's early years, the National Bank wasn’t shy about selling, reducing its gold reserves from 20 to 12 million ounces and raising liquidities of about 2.8 billion euros.

But Portugal stopped selling in 2007 and so did Greece. At the start of the new millennium, Greeks sold substantial amounts of metal, but when the crisis hit, they left supplies untouched and asked Europeans for help.

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This may, however, not be entirely due to the unwillingness of government's to use their gold reserves to pay back debt. There are institutional hurdles: finance ministers do not have direct access to gold reserves. Central banks are independent institutions not subject to government orders — a requirement of European currency union contracts. Still, those same contracts contain other passages that the Europeans have not respected, such as Article 125, known as the "no bailout clause.’’

Article 123 forbids financing state budgets through the European Central Bank, but de facto that happened when the ECB bought Greek bonds in May 2010. Then there’s Article 126, which regulates policy for dealing with excessive deficits in member states. These procedures have been invoked pro forma but never actively implemented. Before the financial crisis, 13 cases were opened then closed.

There is an excellent opportunity to put gold on the market now. The price of the precious metal is only just below record highs. There is also enough leeway as regards the Washington Central Bank Gold Agreement (CBGA), to which a number of central banks are signatories, agreeing not to bring more than a specific amount of the metal onto the market per year.

Of the 400 tons allowed, only 53 tons have been sold during the present accounting period out of which 52 tons came from the reserves of the International Monetary Fund. If the central banks want to sell within the framework of the agreement, they are free to do so until September 26, when sales quotas expire. Many central banks around the world are doing just the opposite, and gold continues to be stockpiled.

Read the original article in German. All rights reserved ©Worldcrunch – in partnership with Die Welt.

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Topics: Economy • Europe

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soundoff (216 Responses)
  1. Roelof

    Those corrupt Greeks have much more. At least 40 billion euro stalled save somewhere in tax paradises. The Greek gov. should come up with a hunting plan, like; they can choose between 70% capital tax or .. 40% when they let the Greek gov. know they've got savings and should pay capital tax.

    July 3, 2011 at 5:49 pm | Reply
    • Stl

      And those corrupt Germans who stole the gold from the Bank of Greece should at some point return it. Plus the loan which was never, ever, paid back, because, according to the Germans, it was Hitler who enforced to Greece, not them. They knew nothing, ans, they, as always, are responsible for nothing.. Those two alone would be enough for Greece, without even the reparations. but, hey, Germans being responsible and picking up their responsibilities? Lets not get crazy..

      July 3, 2011 at 6:41 pm | Reply
      • k


        December 23, 2016 at 5:00 am |
  2. curious

    Personally, $4 billion sounds like just a drop in the bucket. From what I hear, the real Greek gold reserve is in Germany, stolen during WWII. This gold has never been returned. The estimated value of the gold is $300 billion at today's market value. Wow, that is a sizable amount – enough to actually pay off some debts. So, complain about Greece all you want – the government is full of crooks, etc..., but there are certainly more criminals lurking outside Greece's borders past and present who have done and will do far worse to Greece.

    July 3, 2011 at 6:27 pm | Reply
  3. desert voice (troubledgoodangel or Nathanael or Voiceinthedesert)

    This article shows that there are profoung rifts in world financial systems and outlook. There are two problems. First, the greatest beggars are the rich. This for me is untatural, like sodomy. Secondly, there is the debt accumulation canard. This single idiocy has the power to plunge the world into Armageddon! The Bible condemned such infinite debt accumulation in the strongest terms 4,000 years ago. Were the ancients wiser? You bet they must have been. The endless, progressive debt accumulation is tantamount to a hangman's rope being handed to nations and individuals ... giving them no freedom to say no! People! World leaders! Start to think like people did 4,000 years ago ... or we all be history! You have no right to tolerate the debt accumulation scheme! It is a vicious canard!

    July 4, 2011 at 4:54 pm | Reply
  4. yorgzen

    U.S.A has the biggest debt in the world!!! Why do they dont' sell their gold reserves?!?!?
    Can anybody explain it

    July 13, 2011 at 6:05 pm | Reply
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