Wednesday, March 20, 2013
Dissing Krugman: Argentina Turns To Gold As Inflation Tops 26%
In the country Paul Krugman hailed as a Keynesian success story, the people are fleeing the government's currency.
Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation, reports 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).
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.
“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.