An issue that has repeatedly resurfaced, reflecting the intense public skepticism, was the surprise sale of 24.95 tonnes of gold by the Bangko Sentral ng Pilipinas (BSP) in the first half of 2024.

The sale reduced the country’s gold reserves by 15.69 percent to 134.06 tonnes. The World Gold Council (WGC) indicated that the Philippines was the largest gold seller globally during the period, compared to Thailand’s 9.64 tonnes and Uzbekistan’s 6.22 tonnes.

The BSP justified the sale of the precious metal as part of an “active management strategy” in which it capitalized on the high gold prices to generate income without compromising the reserves’ role as a safety net. Gold prices indeed reached record highs in 2024 driven by factors like the US Federal Reserve’s interest rate cuts, which boosted demand for safe-haven assets.

Selling gold at peak prices strengthens the gross international reserves (GIR) by converting gold into liquid assets, such as US dollars, which are more versatile for managing external obligations.

Gold constitutes about 9 percent to 10 percent of the GIR, with foreign currencies (over 85 percent) making up the bulk.

The sale didn’t significantly dent the GIR, which even rose to $107.9 billion by August 2024 from $103.8 billion at the end of 2023, equivalent to 7.8 months of import cover, well above the “adequate” threshold of three months.

While the BSP stressed the gold sale was a calculated move to capitalize on high prices to boost liquid reserves, the gross international reserves dropped to $103 billion in January 2025.

The reserves, however, rebounded to $106.65 billion by the end of February.

Still, the role of the Maharlika Investment Fund (MIF) always crops up in the trail of the gold sale.

Funding for the sovereign wealth fund comes from BSP dividends, not direct gold sales.

Experts, however, conceded that profits from gold transactions could support dividends from Maharlika.

A year after its creation, the Maharlika Investments Corp., which manages the sovereign fund, has not made any investments, focusing instead on its organizational setup and staffing.

Only this year did it start with P1.43 billion worth of investments.

The delay was attributed to poor planning, given the fund’s high-profile launch and promises of rapid economic impact.

The targeted revenues of P35 to P37 billion by the end of this year represent less than 30 percent of its initial capital, raising questions about its ability to catalyze growth.

The MIF’s performance thus far has been lackluster, marked by slow investment deployment, unclear returns, and governance challenges.

Questions were raised about the timing of the gold sale, given that countries like China and India are accumulating gold amid the global uncertainty.

Economists estimate that some $1 billion was lost from the sale when compared with the current prices.

Moreover, while the BSP consistently describes the GIR as “more than adequate” and emphasizes its strategy of active reserve management through gold sales, the perception that government officials had a direct hand in it prevails.

The BSP said its actions of selling gold at high prices and intervening in forex markets are standard central banking tools, but the persistent murmurs over it take the cake.