Thursday, July 22, 2010

Cloud With A Golden Lining

Antonio de Oliveira Salazar was the dictator of Portugal until deposed in 1968, but one of his policies is helping the Portugese government long after he's gone. Under his regime, the Bank of Portugal accumulated gold reserves steadily over the long term. As a result, Portugal now has the highest percentage of gold reserves as a percentage of GDP in Euroland.

The Bank of Portugal is legally barred from selling the gold and sending the proceeds over to the Portugese government, so the reserves are of no help with its share of the Eurocrisis. (Consequently, they don't present a threat to the gold market.) Still, the gold can be sold for foreign exchange should Portugal ever have the need.

A dictator that proved to be a shrewd investor: it makes for a cloud with a golden lining. One point of wry, given rumours floating around: the chief way the gold had been gotten was exporting of wolfram, an ore of tungsten. In essence, tungsten was swapped for gold.

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