The Bank of Guyana has noted that its gold reserves are not plummeting. Gold is sold and replaced based on the market opportunites, the BOG noted.
The bank also noted that gold is not managed as a reserve asset but rather part of a portfolio asset. It also said that gold is sold for several reasons, such as; rebalancing the portfolio among others. Recently, Public Accounts Committee Chairman, Irfan Ali, lashed out at the government for selling off its reserve of gold to furnish the ailing economy.
But, the Government would normally buy gold at a low price and sell at a higher price to ensure maximum profits. However, back in 2010 there about, the price of gold was around US$2000 per ounce, gold purchase by the Guyana Gold Board during that periso below the US$2000 price were hoarded by one of its former General Managers, thinking that the price will continue to go up, that did not happen, the price fell dramatically in a short span of time to somewhere around US$1000, alarge stock of gold was left in the hands of the Government.
This would mean that that large stockof gold that was kept at the Central Bank Reserves were sold later far below the price it was bought for and thus the country loss hundreds of millions.
The trading of gold is not always straight forward and managing the stocks at the Central Bank is not straight forward, even the experts in the gold industry cannot tell when the price will go up or down.
But According to the Governor of the bank, the gold reserve is being managed prudently “Dips in the reserves, therefore, reflect strategic trading rather than any involuntary disposal of gold;”
According to the statistical abstract for January 2018, which is published on the bank’s website, between May 2016 and May 2017, the value of Guyana’s gold holdings fell by almost $10 billion dollars from $14,498,200, 00 to $5,219,500,000. The decrease in holdings has continued with January 2018 holdings valued at just under $3 billion.