EXPOSED: The Dirty Truth Behind Bangko Sentral's Gold Sell-Off

The controversy surrounding the sale of part of its gold holdings by the Bangko Sentral is mired in ignorance and political agenda.

That is typical for the times we live in unfortunately.

Comments circulating on social media—the platform for the “experts”—are both revealing and disturbing assuming these commentators are functionally literate and have access to the Internet.

It seems like nowadays everyone has become an expert in finance and economics and that is frightening and worrisome.

It’s not only Bangko Sentral officials who know when to buy or sell gold; everyone on social media seems to know when and how much gold should be bought or sold.

Isn’t that nice?

The reality however is far from perfect.

There are rules and principles to be followed when making decisions on Central Bank activities like buying or selling gold.

And these principles and rules are not based on public opinion or the mood of the time.

Experts on social media would like everyone to believe that Bangko Sentral just woke up one day and decided to sell a big chunk of its gold reserves at a fire sale price.

Certainly that’s not based on facts.

As expected there are many things that are being taken for granted here and are based on assumption of the commentators.

Now let’s see some examples.

First some people have questioned the timing of the sale.

However let’s look at the statistics first.

Based on the Philippine Daily Inquirer the country’s gold reserves have been rising to as much as $9.2 billion by end-October 2023.

However these same gold reserves started to decline in the first month of 2024, to only $8.2 billion.

Based on this information it’s clear that the rise in gold prices has given our officials the right opportunity to sell its gold holdings.

Moreover other countries like Singapore, South Korea and Thailand also sell some of their gold holdings which indicates that the Bangko Sentral’s decision was purely based on its assets’ financial worth.

Now let’s discuss the points made against the financial authorities who decided to have some of the central bank’s gold reserves sold.

They keep on saying that they are against the selling of gold because of the significant fall in foreign exchange at that time.

Nonetheless it seems to this author that that was not an ideal point for gold would not been needed anyway had the country’s foreign exchange position became a problem.

They say that gold is a shield for vulnerable currencies.

That argument though is only half correct.

What it seems they don't understand is that gold is merely a commodity that can easily be bought or sold on the market, therefore if the goal is to influence exchange rates, selling or buying dollars would surely be more effective than doing so with gold.

No matter what some commentators say Bangko Sentral is a Central Bank that cannot be dictated to by its citizens.

It cannot be dictated to because doing monetary policy is complex.

There are many variables that come into play in order for it to do its job.

Therefore trust that the Bangko Sentral knows what it’s doing and how to do its job.

Its decision to sell gold are just one of many monetary policy instruments it has at its disposal.