The Sri Lankan central bank is estimated to have sold about 3.6 tonnes out of a 6.69 tonnes stock pile of gold (about 215,000 troy ounces) it had at the beginning of 2021, leaving it with around 3.0 to 3.1 tonnes of gold.
In 2020 also the central bank also sold 12.3 tonnes of gold after starting the year with 19.6 tonnes of gold. It is the fourth year running that Sri Lanka has sold gold.
The strategy has been to reduce gold holdings when foreign exchange reserves reduces.
Instead of selling its gold, the Central Bank could have explored other secured trade finance options like collateralizing and borrowing against a pledge of the asset.
It is important to note that whilst many Central Banks have ventured into purchasing gold as a form of safe haven asset to meet emergency liquidity requirements, a sound gold reserves management strategy is required to achieve the optimal portfolio diversification and returns.
As Aga Bullion and DD Holding we are here to help you for your gold management operations worldwide.
Let us know if you would like to learn more about Central Bank Gold Reserves Management.
