MercoPress. South Atlantic News Agency

Caputo confirms Argentina shipped gold abroad

The Economy Minister exulted in telling savers that they would end up selling their US dollars to pay taxes and make the peso a strong currency

Argentina's Economy Minister Luis Toto Caputo confirmed rumors from opposition lawmakers and union leaders indicating that the Central Bank (BCRA) was transferring gold from the country's coffers to foreign destinations. He explained that the move sought to generate a return on an otherwise unproductive metal.

To add to the distress of people in the South American nation, Caputo admitted on social media that “the goal was always to dry out the peso market.” He added: “I've been saying it since the first interview, but hey, some are still not convinced.”

The minister also announced that “[r]eality will prove that soon people will have to sell dollars to pay taxes” and, in the end, the “peso is going to be the strong currency!”

These remarks from a key official of a president who came to power on his promise that he would dollarize the economy are, to say the least, sending contradictory messages, it was explained in Buenos Aires financial circles.

Caputo also insisted in a TV interview: “It is a very positive move by the Central Bank because today there is gold in the bank which is as if you had a property inside and you could not use it for anything. On the other hand, if you have that gold outside, you can get a return and the country needs to maximize the returns of its assets,” he argued.

According to local media, the BCRA would be able to use the gold as collateral for fresh US dollars through the Bank for International Settlements (BIS) or yield interests for its deposit. Converting the gold reserves into liquid US dollars entails an interest rate, it was also explained.

President Javier Milei announced in recent days a new mechanism for the “sterilization of pesos” through government intervention in the currency exchange market from an administration that promised to lower taxes and let the economic forces play freely. The current exchange gap between the official and the “blue” (a euphemism for “black market”) dollar is about 60%.

Bank workers' union leader and Congressman Sergio Palazzo had requested the release of the information on the shipments of gold between June 7 and 28 on British Airways flights was made available. BCRA President Santiago Bausili said a reply to that request is to be delivered within the next two weeks.

Most of Argentina's 1.98 million ounces of gold have been reported to remain in the Central Bank's vault while the rest is scattered between Basel (BIS) and London. According to Infobae, the gold abroad can hastily be turned into money but it would take longer to do the same with the one at home. “The one in London can be used in a minute, the one in Buenos Aires - which is good delivery gold - can be used in three days,” the outlet quoted an unnamed expert source as saying.