Argentina Turns To Gold As Inflation Tops 26%

Tyler Durden's picture

From GoldCore

Argentina Turns To Gold As Inflation Tops 26%

Today’s AM fix was USD 1,611.50, EUR 1,247.10 and GBP 1,064.12 per ounce.
Yesterday’s AM fix was USD 1,602.50, EUR 1,238.41 and GBP 1,059.78 per ounce.

Silver is trading at $28.95/oz, €22.52/oz and £19.23/oz. Platinum is trading at $1,558.50/oz, palladium at $737.00/oz and rhodium at $1,250/oz.

Gold rose $7.30 or 0.45% and closed yesterday at $1,612.60/oz. Silver rose to $29.10, and then finished down 0.03%.

Cross Currency Table – (Bloomberg)

Despite an increase in risk appetite in recent months, systemic risk remains. As Reuters' Pedro da Costa noted the "global impact of events in Cyprus casts doubt on the notion that the financial system has gotten a lot stronger since the crisis." The Cypriot deposit levy is creating jitters among some investors who are increasing their gold positions. 

Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation reported Bloomberg.

Banco de la Ciudad de Buenos Aires, Argentina’s only bank offering gold bullion coins and bars to investors and savers is negotiating with mining companies to purchase gold direct as surging demand depletes the scrap supply. 

The bank began marketing gold to clients after Argentina tightened currency controls in October 2011, selling 280 kilos in year one for 102.6 million pesos ($20 million).

Gold, 5 Years – (Bloomberg)

Argentines are utilizing gold to hedge their savings as economists forecast the peso will lose more value than any currency in the world, and President Cristina Fernandez de Kirchner forbids dollar purchases. 

The nation’s inflation rate of 26% is also eroding Argentina’s peso- denominated bonds to fall 5.5% ytd. 

“I’m buying gold every chance I get,” Guillermo Acosta, a 27-year-old security guard, said inside a branch of Banco Ciudad in downtown Buenos Aires. “With this inflation, I feel like my savings will evaporate if I keep them in pesos.”

Acosta’s initial investment of 10 grams of gold in February last year has returned 47% as the price per gram rose to 381.5 pesos from 260 pesos.

Gold in Argentine Pesos – 5 Years – (Bloomberg)

With Argentina printing pesos to finance itself, the growth of pesos in the economy has rose 38% in the past year, leading analysts to predict that the currency will depreciate 12.9% through year-end, the highest of currencies tracked by Bloomberg.

Banco Ciudad is the only bank left that trades in gold after Fernandez  banned the purchase of certified 99.99% pure gold for savings in July. The bank sells it at 99.96% purity, according to Carlos Leiza, who oversees the lender’s gold trading.

There is a 35% gap in the prices to buy and sell physical gold at Banco Ciudad, while there’s no premium to sell the country’s benchmark 2017 dollar bond in the local market, according to the Buenos Aires-based Open Electronic Market, known as MAE.

Gold sold by Banco Ciudad also isn’t recognized internationally, making it more difficult to determine its value, he said.

The cost of 100 grams of gold in Argentina as of last week was 36,646 pesos. In New York, the same amount based on the benchmark troy ounce (31 grams) sold for about $5,126.

The bank multiplies that price by 0.95 to account for the lower quality of the gold to get a dollar price of $4,870.

 “Historically, gold has been seen as a store of value, so as long as options for doing that in Argentina are limited, people are going to keep buying it,” Banco Ciudad’s Leiza told Bloomberg.

Bloomberg’s Alix Steel covered the story and a short video about record gold demand in Argentina can be watched here


Cyprus fears, FOMC hopes support gold prices – Market Watch

Gold holds near 3-week high on Cyprus crisis
– Reuters

Gold Trades Near This Month’s High Before Fed Policy Statement - Bloomberg

India central bank may ban Gold coin sales by banks – Bullion Street


Video: Cyprus Contagion? HSBC Says Gold To Average $1,700 - Bloomberg

Eagle Sales Soar Even as Metal Prices Fall - Numismaster

"Get Your Money Out While You Can" – Zero Hedge

Video: COT for Gold Very Bullish – Got Gold Report

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sampo's picture

When would it be Argentum's turn?

fuu's picture

Well Silver got naming rights to Argentina a few centuries back.

Sheeple Shepard's picture



"IMF head Lagarde's flat searched in Bernard Tapie probe"

philipat's picture

The price "Has rose". Is this connected to garden flowers in some way??

Pladizow's picture

How do you say BitCoin in an arrogant spanish acsent!

El Oregonian's picture

"Poe-Keeto Mas, Por Fav'or"

slaughterer's picture

Watch PMs get smashed again during the FOMC release today.  Short paper PMs--the new Kunis trade.

fuu's picture

Bernanke is better than the blue light at Kmart.

Sheeple Shepard's picture

"With Argentina printing pesos to finance itself..." 


Sounds, got nothin'.

pirea's picture

not realy, their printer is not as good as benny's

kralizec's picture

Pesos?  We don't need no stinkin' Pesos!

css1971's picture

Couldn't happen here.

Sheeple Shepard's picture

"Gold sold by Banco Ciudad also isn’t recognized internationally, making it more difficult to determine its value, he said." OUCH! 

BandGap's picture

I wish I could turm the dog shit in the yard to gold, that would really be something.


Silver Garbage Man's picture

630 000 silver eagles sold Monday , someone is getting the message.

kliguy38's picture

Time to send in the troops.....

TrumpXVI's picture

Isn't Mexico printing now to devalue its peso?

Man, with all that oil down there, I was counting on my pesos to help fund my retirement.

augustusgloop's picture

Look up Cantarall Oil Production. Ask HSBC what is bringing dollars into the country. 

machineh's picture

'There is a 35% gap in the prices to buy and sell physical gold at Banco Ciudad, while there’s no premium to sell the country’s benchmark 2017 dollar bond in the local market, according to the Buenos Aires-based Open Electronic Market, known as MAE.'

Quotes from coin dealers in Argentina regularly show 20% bid-ask spreads, even on Latin American gold coins.

I have never been able to figure out why Argentina's gold market is so grossly uncompetitive, when the need for hedging the peso is so great.

It would be tempting to compete with them. But the Kirchner regime probably would send over some mafiosi to make you an offer you couldn't refuse, or simply rob you (most bank branches, and many gold dealers in BsAs have armed guards posted, since robberies are rampant).

Because of the larcenous bid-ask spreads, the USD remains a far better hedging option than gold for Argentines.

Snoopy the Economist's picture

"I have never been able to figure out why Argentina's gold market is so grossly uncompetitive"

It's probably govt controlled gold sales - the govt will always get their cut - pay me now AND pay me later.

pashley1411's picture

This would the regime that would send the local Kirchner scouts over to collect your gold, thank you very much.   

Argentina also puts paid to the notion that the sheeple won't vote to attend to their own fleecing.   

machineh's picture

Here are some Argentine coin quotes:

Krugerrand ... Compra 1.120 ... Venta 1.615!getOroPorCategoria.action

The bid-ask spreads are enough to make you puke chunks. Absolute robbery.

p.s. The exclamation point is messing up the link. Just copy and paste the whole line.

flacon's picture

The Ask price is the real price. 

machineh's picture

Good point. Maybe one can trade gold on mercadolibre (the LatAm Ebay) and dodge the spread:

Needless to say, meet in a public place to transact!


Gromit's picture

Thanks for posting!

Good intel, a Krugerrand is 15K and a Mexican 50 Peso 19K. Argentinian Pesos.

How much is that?  Depends on your access to dollars. Official rate is about 5, street rate is 7.5-8.


DoChenRollingBearing's picture

Great posts machineh and Gromit.  It seems that there may be an opportunity to make some arbitrage profits in taking a few Gold Eagles to Argentina if you can find a way to keep the risks down (like knowing people or meeting at a cafe for example).

But, Argentina is far away, not on the way to anywhere.  But, if you ARE down that way, you could sell some gold to subsidize your trip.

Gromit's picture

I checked the MercadoLibre site, looks like it costs 5-10% to advertise and sell with an upper limit of sales fee of 650 Pesos.

On these numbers I could buy a Krugerrand stateside for $1650, sell it MercadoLibre for 19K (current asking price) and net +- 17,100 Pesos ARS. Not sure how to receive the money in Argentina, they won't let me open a bank account.

I'm only going to be there three weeks anyway.

Or just change the $1650 in Buenos Aires for 7.75, equals 12787 Pesos ARS.

Midas's picture

My friends tell me there is a strong black market for US dollars in cash money.  You can get nearly twice the official exchange rate which makes it an affordable destination. 

bonzo112358's picture

“What experience and history teach is this – that people and governments never have learned anything from history, or acted on principles deduced from it.”
G. W. F. Hegel

MiltonFriedmansNightmare's picture

The Argentinians are in need of a primer from the good ol USSA on CPI calculations....monthly CPI up 0.15% excluding food, energy and everything else needed for survival.

SuperDeDuper's picture

I never understood paper money, its just paper, came from trees, has no physical value other than the language on it.  Supposedly gold is what backs the paper money, but in this day and age where they just turn on the printing presses its just funny money, which will devalue it.

Just buy gold.  Lots of it, build your house made of it, your car, your teeth, hell even gold plate your balls.  Oh and buy lots of guns, because people will want to take it from you.

TrulyStupid's picture

Buying guns won't help you if youve already sold your scrap gold, like most Sheeple. They've already come for your gold and given you US dollars, more guns or 3 magic beans in trade.

CheapBastard's picture

No wonder those gold pesos are so hard to find...they are all being grabbed as a  store of wealth.

MFLTucson's picture

While the US turns to paper and manipulates inflation rates to fool the public.

d edwards's picture

I believe "Banko Cuidad" translates as City (Citi?) Bank. Interesting co-inkydink.

Midas's picture

You mis-spelled Banco Ciudad, but the word you spelled (cuidad) means care or caution.  Another co-inkydink?

Floodmaster's picture

Argentina's Central Bank banned the purchase of U.S. dollars and will soon ban gold ownership.

akak's picture

Authoritarian Keynesianism/Peronism revealed in all its ugly glory.

AchtungAffen's picture

This article forgot one very important thing.

I'm an argie, and I have gold. But gold is valued in dollar-converted pesos at the official rate. So, for example, an ounce at U$D1600 would be around AR$ 8000. But having U$D1600 in US dollar notes would be worth AR$ 13600 in the "black market" (which isn't so black because it's unofficially supported by the state).

This imbalance is some crazy shit and I don't really think it can go on forever. At some point gold has to recouple with the real value of the U$D. And I never bought Banco Ciudad's bars. I had the chance to buy real stuff before the ban on forex. Not only that, but Banco Ciudad only sells 100 grams per day... that's like 3 ounces a day, and it doesn't sell international coins and bars.

If I ever need to sell my gold I guess I'd go to Uruguay, would get a better price.