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Reuters said on Sunday that since the war started in February, Ukraine has sold gold worth $12.4 billion. The deputy head of Ukraine's central bank said that the country needed to sell gold to stay in business. He said, 'We're selling this gold so that our importers can get the things the country needs.'
The data doesn’t add up!
So far so good! However, the devil lies in the details! The question is, how come Ukraine sold this much gold? As per Schiffgold.com website, the National Bank of Ukraine (UNB) held about 27 tons of gold in its reserves valued at about $1.6 billion when the war started. This data can be verified at Gold.org website.
(Source: Gold.org)
Where did the extra gold come from?
The facts don't make sense! To put things in perspective, Ukraine has sold more than seven times the amount of bullion it had at the beginning of the year. Where did this $10.8 billion worth of extra gold come from? Maybe a fast increase in mine output? Ukraine has more than 3,000 tons of gold in its soil. But a report from Mining World says that the country only had a few mines that were working before the invasion.
It's possible that Ukraine sold gold that other countries gave to it. The other possibility is that the country is getting gold from commercial banks or other institutions in the country. No matter what it is, it is as clear as the sun that Ukraine sold gold that it never had in its coffers.
Ukrainian economy in tatters
It goes without saying that the war has hurt the economy of the country a lot. Exports have dropped, and now the country depends on foreign aid and easy loans to stay afloat. Yesterday, Reuters said that Ukraine has asked for its debt to be frozen because the war has hurt its economy.
Reuters said, "Ukraine has asked its international creditors, which include Western powers and the world's largest investment firms, to freeze its debt payments for two years so it can use its limited money to fight Russia."
Estimates show that Ukraine's GDP has dropped by at least 45–50%. Recently, Ukraine's finance ministry said, "The war has caused cash flow problems and increased demands on government resources that have never been seen before." This has made it hard for Ukraine to pay its debts.
Zelensky also said earlier this week that his country needs help from the West worth at least $9 billion per month in order to stay alive. Taking a page from Turkish President Recep Tayyip Erdoan's playbook, he is now threatening the EU with a huge wave of Ukrainian asylum seekers if Ukraine's coffers are not filled up.
Ukraine's economy has been hurt by the war. So far, it has been able to get by with the help of the West. But as Europe's economies are being hurt by the growing energy crisis, the West may soon change its mind about giving Ukraine billions of dollars in aid. So, to help its economy, Ukraine is now selling gold that doesn't even exist. But this strategy can't stop Ukraine from losing the war, it can only put it off for a while.
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