Spain says it dumped gold for more profitable bonds

By Jonathan House
Dow Jones Newswires
via FXStreet.com
Wednesday, June 6, 2007

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=9f33774a-fd...

MADRID -- The Bank of Spain’s recent gold sales are part of a strategy to shift its reserves into more profitable fixed-income instruments, Spanish Finance Minister Pedro Solbes said Wednesday.

"What we aim to do is to sell gold, an unprofitable asset, to reinvest in bonds, which are more profitable," a Solbes spokeswoman quoted the minister as saying in answer to a question about the gold sales in a Senate hearing.

"The objective of our reserves is to maximize their profitability," Solbes said.

The Bank of Spain sold 28 tons of gold in May and 40 tons in both April and March, accounting for the bulk of recent sales made by the Central Bank Gold Agreement signatories.

Under the terms of the CBGA signed in 2004, the Bank of Spain and 14 other European central banks agreed to limit gold sales to 500 tons per year and to not sell more than 2,500 tons total through the year 2009.

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