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 (US$475 million) of its bullion in June, the central bank reported on its Web site, equivalent to 67 percent 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 last quarter added miner Barrick GoldCorp to its portfolio.
Gold now accounts for about 0.4 percent of Colombia’s international reserves, compared with about 77 percent of Venezuela’s, 42 percent of Bolivia’s, 9 percent of Argentina’s, 4 percent of Mexico’s, 3 percent of Peru’s and 1 percent of Brazil’s.
In June, the gold price averaged US$1,736 an ounce. Since then, the metal rallied to an all-time high of US$2,075 an ounce earlier this month.
Spot gold on Friday weakened 0.4 percent to US$1,939.04 an ounce, down 0.2 percent for the week.
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 e-mailed 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 COVID-19 pandemic.
Mineros SA, the only gold miner listed on Colombia’s COLCAP, has returned 9 percent this year in US dollar terms, while every other stock on the benchmark index has dropped.
The country made a profit of about US$1.6 billion on its reserves in the first half of the year, mainly due to the rally in US Treasuries, which account for most of its holdings.
Separately, South Africa blocked AngloGold Ashanti Ltd from completely exiting the country by ordering it to keep its primary listing in Johannesburg to conclude the sale of its last remaining local assets.
The transfer of mining rights to Harmony Gold Mining Co — which is needed to close the sale of the Mponeng mine and surface assets in South Africa — is also conditional on AngloGold keeping its headquarters in the country, the South African government said.
The company has mulled moving its main listing, so the state’s move effectively keeps AngloGold tied to the country even if it concludes the assets sale.
While the government did not give a reason, it indicates that South Africa is trying to maintain some control over an industry that has been steadily declining. The company’s shares dropped as much as 4.7 percent in Johannesburg.
AngloGold announced the sale of the assets earlier this year in a US$300 million deal, paving the way for an exit from South Africa for a company that emerged from a mining empire created by Ernest Oppenheimer a century ago.
The miner has whittled down its presence in South Africa, focusing on more profitable operations in Africa, Australia and the Americas, as the sector in its home country dwindles amid challenges of mining the world’s deepest gold deposits.
“AngloGold Ashanti Ltd shall not disinvest from the South African economy by delisting from the Johannesburg Stock Exchange,” nor by relocating its head quarters from the country, the South African Department of Mineral Resources and Energy (DMRE) said by e-mail.
The delisting refers to the primary listing, it said.
“AngloGold has not yet received all necessary approvals from the DMRE, which are required to fulfil the conditions to the sale agreement for the sale of its South Africa assets to Harmony Gold,” an AngloGold spokesperson said by e-mail. “We remain in dialog with the DMRE in relation to these, and will make the necessary disclosures once those engagements are concluded.”
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