Bolivia to buy up domestic gold production

Bolivia's central bank will buy gold from the domestic gold mining sector over the next three years, the central bank recently announced well-known. Also, the country's government wants a new organization stuff to coordinate the purchase of the gold. With this program, the central bank wants to support the domestic gold mining sector. It should also discourage illegal export of precious metals. In 2019, an estimated 30 tonnes of gold disappeared from the South American country, much of which ended up in neighbouring countries such as Peru and Brazil.

In 2011, the Bolivian government passed a law that allowed the central bank to buy gold. The central bank has only used this option once, namely a purchase of 95 kilos in 2014. In the coming years, it wants to buy precious metals on a much larger scale to replenish its reserves. According to Ramiro Villavicencio, Bolivia's minister of mines, the country's gold mining sector produced about 42 tons of gold in 2019. A large part of this went abroad, because gold is the country's most important export product after natural gas.

Central banks buy directly from gold mines

In recent years, more and more central banks have been buying directly from the domestic gold mining sector. And they may have several reasons for this, the World Gold Council recently in a new report. For example, central banks can use their own currency when buying the precious metal domestically, so they don't have to draw on their foreign exchange reserves. It also gives a boost to the domestic mining sector, because gold mines are assured of a reliable buyer. It also allows the authorities to improve working conditions by imposing certain requirements on suppliers of the gold.

The central banks of the Philippines, Mongolia, Ecuador, Zambia and Ethiopia are already buying up part of the domestic gold mine production. Some larger central banks are also buying up part of the domestic gold production, such as Russia, China and Turkey. It is the cheapest way for central banks to expand their gold holdings. It is also a way to keep out dubious middlemen, who smuggle the gold from small-scale mining abroad and collect a hefty premium for it.

This contribution was made from Geotrendlines