While gold seems to mostly flow from west to east these days, some of it apparently still flows south to north, according to Bloomberg. And it flows directly from Ecuador’s central bank into the coffers of Goldman Sachs. Ecuador’s Finance Ministry needs liquidity to cover a projected budget deficit of nearly $5 billion (pikers!) this year, and bond issuances are problematic since a default only 5 years ago.
Here’s some refreshing candor from central bank president Diego Martinez, via an official statement:
“Gold that was not generating any returns in vaults, causing storage costs, now becomes a productive asset that will generate profits,” the central bank said in the statement. “These interventions in the gold market represent the beginning of a new and permanent strategy of active participation by the bank, through purchases, sales and financial operations, that will contribute to the creation of new financial investment opportunities.”