PH needs to stock up gold amid trade shift — banker
The Philippine government must stock up on gold reserves as a number of countries are increasingly using other currencies and payments for trade, after their economic sanctions from the United States.
“Many countries are taking moves for what they call de-dollarization, changing the composition of their reserves from just predominantly dollars to a mixed bag that includes the Russian ruble, Chinese yuan and so forth,” Roberto F. de Ocampo, chairman of Philippine Veterans Bank and a former member of the Board of Governors of both the World Bank and Asian Development Bank said last Tuesday over the Daily Tribune’s online talk show, Straight Talk.
As the dollar is seen to lose some purchasing power, many countries are selling US government bonds to buy gold, he said.
New valuation of currencies
“The intention is that the aggregation of countries will come up with a new valuation of currencies based on gold, not based on the dollar” De Ocampo explained.
Over 20 countries have either been fully or partly sanctioned by the US through trade embargo due to reports of terrorism and/or human rights violations.
Other currencies and payment modes
As a result, these countries have been doing trade with non-US territories using other currencies and modes of payments, shrinking the use of the dollar by 59 percent in 2021, according to the International Monetary Fund.
This was notable during the pandemic and trade with China — which others see replacing the US as the world’s biggest economy — and after Russia’s invasion of Ukraine last year.
To be future-proof, De Ocampo said the government should stock up on gold reserves. “We have one of the biggest gold reserves in the world. It’s just sitting there in Mindanao. And yes, it’s being smuggled.”
According to market researcher Statista, the Philippines produced gold totaling 25,000 kilograms worth P72.2 billion in 2021 from Surigao and Masbate, among other areas in Mindanao.
‘Many countries are taking moves for what they call de-dollarization, changing the composition of their reserves from just predominantly dollars to a mixed bag that includes the Russian ruble, Chinese yuan and so forth.’