Colombia sold two-thirds of its gold reserves in a single month just as investors seeking havens against global turmoil were about to drive the metal to a record high.
The nation sold 1.8 trillion pesos ($475 million) of its bullion in June, the central bank reported on its website, equivalent to 67% of its holdings at the end of May.
Investors have piled into precious metals this year as yields on other haven assets such as treasuries sank to record lows. The rally even drew in Warren Buffett, a noted gold skeptic, whose Berkshire Hathaway Inc. added miner Barrick GoldCorp. to its portfolio last quarter.
Colombian gold once attracted Spanish conquistadors who believed the country to be home to El Dorado, a place of fabulous wealth. But the nation’s central bank doesn’t share the general enthusiasm for the metal.
Gold now accounts for about 0.4% of Colombia’s international reserves, compared to about 77% of Venezuela’s, 42% of Bolivia’s, 9% of Argentina’s, 4% of Mexico’s, 3% of Peru’s and 1% of Brazil’s.
In June, the gold price averaged $1,736 an ounce. Since then, the metal rallied to an all-time high of $2,075 an ounce earlier this month, and is now trading at about $1,950 per ounce.
Colombia’s June bullion sale was based on “optimization exercises” in which the central bank monitors interest rates and asset volatility to determine its international reserve portfolio holdings, the bank said in reply to emailed questions.
The gold price rally has provided a rare bright spot for the Colombian economy suffering its deepest slump in more than a century amid the pandemic. Mineros SA, the only gold miner listed on Colombia’s Colcap, has returned 9% this year in dollar terms, while every other stock on the benchmark index has dropped.
The country made a profit of about $1.6 billion on its reserves in the first half of the year, mainly due to the rally in U.S. Treasuries, which account for most of its holdings.
(By Oscar Medina, with assistance from Fabiola Zerpa, Patricia Laya and Mario Sergio Lima)