The value of gold reserves held by the Bank of Portugal on behalf of the Portuguese people has crashed 31% in a year.
The central bank did not sell off any gold in the past year, but the drop in the international price of gold caused a significant drop in its value which has to be reported in the Bank's year end summary.
At the end of 2012 the Bank of Portugal had €15.51 billion in gold reserves, things looked good, Portugal at least had some serious assets. At the end of last year this was valued at €10,71 billion, down a massive 30.9% in a year.
Gold is valued in US dollars which have depreciated against the euro.
The declining price of gold, plus the relentless expansion of Portugal’s public debt despite political claims to be sorting out the problems, led to a worsening of the country's net international investment position from 116.1% of GDP to 118.9%.
The Bank of Portugal has often been questioned as to why this valuable asset sits in its vaults, rather than being used to pay off debt.
There has never been a credible explanation for hoarding the gold, but at least by keeping the metal in situ Portugal will not be accused of ‘doing a Gordon’ referring to former UK Chancellor Gordon 'Prudence' Brown who sold much of Britain's gold reserves, 400 tonnes of it, in 1999 when the price was between $256 and $296 an ounce. It then rocketed, eventually reaching a high of $1,895 in 2011.
