Eleventh-hour negations between Greece and its creditors passed Thursday with no resolution in sight but one European Bank said that the beleaguered nation has one more Hail-Mary shot, but it’s only a short-term solution and could exacerbate the situation.
In a note published Friday, German-based bank Commerzbank hypothesized that Greece could sell some of its gold reserves to meet its debt obligation by the end of the month; however, the bank also recognized that this is an unlikely scenario.
“According to the latest [International Monetary Fund] statistics, the Greek central bank holds 112.5 tons of gold, worth €3.8 billion at current market prices. This equates to a good 1% of Greek government debt and 66% of Greek foreign currency reserves. Greece could in theory meet the €1.5 billion payment due to the IMF at the end of the month by selling 47 tons of gold from its reserves, if no agreement is reached with international creditors on the payment of bailout funds,” the analysts said in their research note.
They also noted that this scenario, an emergency sale of Greece’s gold, could be one reason why gold hasn’t benefited from increased risk aversion sentiment.