Argentina’s controversial new President, Javier Milei, has chosen to stash an unspecified quantity of the nation’s gold reserves abroad. The country is estimated to hold about two million troy ounces, valued at around C$6.2 billion.
But where? Why? How much? And is it safe? These questions have been a cause for increasing concern and speculation among certain Argentine figures.
According to a report from the renowned publication El País released on Saturday, Milei’s administration has admitted to transferring a quantity of the yellow metal out of the Central Bank of the Argentine Republic (BCRA). However, there are few further details aside from that. The Buenos Aires Times claims the gold was sent to an unspecified part of Europe.
El País writer Javier Lorca says there is now concern that it could be seized as well due to long-standing legal cases filed against the South American nation by foreign creditors.
Argentina’s economy has been in dire straits for quite some time and the ways in which Milei has tried to remedy the situation have sparked protests and outrage among certain residents. He has managed to curb the inflation rate significantly, but Argentina still has debt exceeding C$500 billion.
The International Monetary Fund has claim to a fifth or more of that sum. Poverty remains a prevalent issue.
Milei has considered making the American dollar Argentina’s official currency to help combat these problems, for an assortment of reasons.
Argentina’s President Javier Milei silently transferred country’s gold reserves out. Central bank didn’t inform anyone, the matter came to public via bank workers Union.
Milei is famous for wanting to fix his country’s economy by adopting US dollars. pic.twitter.com/VGgOo2jmAC
— The Poll Lady (@ThePollLady) July 31, 2024
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Argentine economy minister gives reasoning, vague details
News of the gold transfer was never publicly announced by Milei’s administration or the BCRA. The leader of a local bank workers union helped discover the occurrence through a freedom of information probe.
The country’s government has not formally addressed his information request yet. But, as a result of the inquiry, Argentina’s Economy Minister Luis Caputo did acknowledge that gold was transferred out of country.
“It’s a very positive move,” Caputo said, “if you have gold in the BCRA, it’s as if you have [assets] inside that cannot be used for anything.”
“But, if you have it outside the country, you can get returns,” he explained to a local TV channel. “It’s much better to have it guarded outside, where they pay you something.” He claims it will help Argentina maximize desperately needed returns on its assets.
These statements attracted scrutiny. They did so because of low returns the nation would receive by depositing gold somewhere like Basel, Switzerland or London. El País, which has nearly nine million followers on X, says multiple economists and government officials have viewed the move as being highly questionable.
“Removing gold from our country implies risks that gold doesn’t have when it’s in the Central Bank’s vaults,” Buenos Aires government minister Carlos Bianco said.
Domestic mining a saving grace
Thankfully, despite concerns over government resource management and the economy, Argentina’s prolific mining industry has been a key economic driver during the nation’s turbulent times and difficulties. This is particularly true for the country’s booming lithium mining sector.
Four major new lithium projects in the nation’s northern provinces just entered the production phase and Argentina’s lithium production is expected to double going forward. Between 2022 and 2024 the country’s lithium carbonate output tripled.
Junior developers like Lithium South Development Corporation (TSX-V: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) and Galan Lithium Limited (ASX: GLN) have set up shop in the Salta and Catamarca provinces for the foreseeable future.
Lithium South Development Corporation is a sponsor of Mugglehead news coverage
rowan@mugglehead.com
