The voracious rise in the price of gold in international markets (this week it broke the US$4,600 barrier for the first time) has put under scrutiny the strategy of the Central Reserve Bank of Peru (BCRP) regarding the composition of the international reserves—emergency fund in gold and currencies other than the sun to face financial crises and external shocks— which at the end of the year reached US$89,321 million, the highest level in its history.
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The monetary authority, chaired by Julio Velarde, ruled out increasing its participation in gold and has defended its conservative approach. However, economists consulted by this newspaper warn that the country could be missing an opportunity to diversify risks and strengthen the real support of its external assets in a scenario of increasingly uncertain global changes.
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Since March 2024, the price of gold has more than doubled. From trading around US$2,300 per ounce, it rose to above US$4,000 on average and, according to estimates by various international consulting firms, could reach US$6,000 by the end of 2026. This behavior contrasts with that of the dollar, which has shown a weakening trend against other currencies and real assets.
BCRP maintains gold reserves at just 5%
Despite this, the BCRP has reiterated that it is not considering increasing its gold holdings, which currently represent around 5% of international reserves, equivalent to about 34.6 tons, a proportion that has remained practically unchanged for more than 15 years.
Gold price broke the US$4,600 per ounce barrier for the first time. Source: Inversoro.es
For him BCRP general manager, Paul Castillothe role of reserves is not to maximize profits, but to act as insurance against crises. “International reserves are means of payment that can be used in case of emergency in global financial markets. So, assets that have a lot of acceptability have to be used,” he recently explained. Along these lines, he specified that the assets must be, first of all, safe; secondly, liquids; and just as a third criterion, profitable.
“Getting rid of an asset that is less liquid is much more expensive. To get an idea, the dollar trades 22 times more in a day than gold. In other words, it is a much more liquid asset,” said Castillo. In his opinion, gold can gain value in certain contexts, but it is not the most appropriate instrument to respond to an immediate financial emergency. “It’s as if we had bought a house and there is a real estate bubble. We are going to gain value, but it is not useful for an emergency,” he remarked.
Economists question the BCRP’s commitment to the gold boom
However, for Armando Mendoza, economist and researcher, this does not imply that the current composition of the reserves should not be reviewed. “Looking at the evolution of gold in recent years and what is expected in the future, there is largely a lost opportunity that continues to be lost,” he said. As he explained, if the BCRP had gradually increased its gold holdings in previous years, “that reserve would automatically have much more value today in terms of international currency.”
Although he is emphatic in distancing himself from the purely financial argument. “I don’t buy the argument that it is because we are losing money or profitability. That is the mentality of a private investor or a stock market trader,” he said. In his opinion, the discussion should focus on the security and stability of reserves, not on maximizing profits.
In a more critical line, the economist and researcher at the Universidad Nacional Mayor de San Marcos (UNMSM), Jorge Manco Zaconetti, considers that the BCRP’s approach responds more to an ideological conviction than to a realistic reading of the international context. “The BCR is aligned with the policies of the United States. We have 95% of the reserves in assets referred to the dollar,” he said. In his opinion, this exposes the country to unnecessary risk in a scenario of weakening of the dollar and growing indebtedness of the US government.
Economist and researcher at UNMSM Jorge Manco Zaconetti points out that there is a huge lost opportunity cost between 2022 and today by not diversifying gold reserves.
Zaconetti maintains that Peru faces a clear “opportunity cost” for not having increased its gold reserves between 2022 and 2025. “Instead of having 34 tons, we could have 50 or 60,” he stated.
The economist recalls that the country is a major producer of gold, with exports around 6.8 million ounces annually. However, the audited production recorded by the Ministry of Energy and Mines does not exceed 3.8 million ounces, a gap that, according to Manco Zaconetti, has been dragging on since 2004. “This imbalance is getting bigger and bigger,” he warned.
Armando Mendoza agrees that the high concentration in US Treasury bonds is no longer as unquestionable as before. “All financial assets are based on the principle of trust. If you take that away, they are worthless,” he explained. Although he recognizes that historically US bonds have been considered the safest asset in the world, he warned that “in recent times there has been growing uncertainty regarding US debt”, influenced both by factors such as the economic and fiscal policy of Donald Trump’s government.
“What is being observed is that countries like China and Japan are beginning to reduce their exposure to Treasury bonds,” said Mendoza, who added that this process does not imply the collapse of the dollar, but rather a gradual movement of global asset diversification. “The scenario is no longer the same as it was 10 or 20 years ago,” he remarked.
From this perspective, it is considered that gold plays a special role within reserves. “Gold is the last reserve asset. If you remove confidence in papers, the last thing that retains value is gold,” he stated. For this reason, he maintained that maintaining only 5% of reserves in this metal “should be reviewed”, although he clarified that this does not imply abandoning the dollar or bonds, but diversifying prudently.
The BCRP, meanwhile, maintains that Peru is already among the countries in the region with the highest proportion of gold in its reserves within the inflation targeting scheme. According to the issuing entity, Chile, Mexico, Brazil and Colombia maintain gold holdings ranging from 0% to 5.1% of their international reserves.
Gold reserves for “Agricultural Reactive”
For Manco Zaconetti, the increase in the value of gold would not only have strengthened the country’s external support, but could also have expanded the fiscal space for the application of countercyclical policies or productive support. As he explained, having more solid external support would make it possible to design stimulus mechanisms similar to an “Agricultural Reactive”, aimed at small producers in the domestic market who today face sharp price declines and sell at a loss, without compromising macroeconomic stability or resorting to irresponsible use of reserves.
“Just as in 2020 Reactiva Peru was financed with more than S/60,000 million, an absolutely Keynesian measure, today those resources could be used for a Reactiva 2 focused on family farming“, he stated.
Zaconetti warned that small farmers who produce potatoes, onions or corn for the domestic market lack state support, unlike agro-exporters or producers in the United States and Europe, where subsidy schemes exist. In that sense, he maintained that strengthening reserves in real assets such as gold could contribute to greater economic and food autonomy for the country.
“Just as we fight for energy autonomy, we also have to fight for food autonomy,” he stated.
The economist insisted that a more robust external position would provide greater room for countercyclical policies, similar to Reactiva Perú, but this time oriented to the domestic market and family farming. “Traditional agriculture is the ugly duckling of the model. Millions of small farmers who produce potatoes, onions or corn do not receive any support from the State, unlike what happens in the United States or Europe,” he remarked.
Finally, he recalled that the Organic Law of the Central Reserve Bank authorizes the entity to buy and sell foreign currency, gold and silver without the need for a law of Congress, as it is a strictly technical decision. “The stability of the BCR has been a strength, but it can also become a weakness if it continues to operate with the same scheme as thirty years ago, ignoring that the international scenario has changed,” he concluded.
