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SOFAZ has no Plans to Increase Gold Reserves

Azerbaijan's state oil fund SOFAZ, an entity that accumulates and manages Azerbaijan's oil and gas revenues, has no plans to increase its gold reserves.

As of today, the fund's reserves portfolio includes 30,175 kilograms of gold, which is about 3.5 percent of its total assets.

"At the moment, increasing gold reserves is not in the plans," the source at SOFAZ said.

SOFAZ was established in 1999 with assets worth $271 million.

The main purposes of the fund are the management of earnings from the energy sector and the investment of this capital abroad to minimize negative impacts on economy, the prevention of the 'Dutch disease', ensuring savings for future generations.

SOFAZ assets are placed partly in securities and partly in money market instruments (deposits, bank accounts).

According to SOFAZ's investment strategy, up to five percent of its investment portfolio may be invested in stock, up to five percent in real estate, and up to five percent in gold.

The first batch of gold consisting of 32,150 troy ounces was delivered to the country on January 11, 2013, while the second batch was brought on February 1, and the third batch on March 1.

SOFAZ assets decreased by 3.56 percent from earlier in the year, from $37.104 billion to an estimated at $35.783 billion as of July 1.

It is believed that SOFAZ's decision to not increase its gold reserves is due to the devaluation processes taking place in the world. The decision of the world's second-largest economy – China – to devalue its national currency, the yuan, by 4.6 percent has unsettled global financial markets, and has forced many countries to depreciate their national currencies as well.

Gold is often used as an alternative store of value and tends to rise when currencies weaken.

Bloomberg reported that following the biggest monthly drop in two years, gold has risen almost every day in August. Gold for immediate delivery climbed for a fifth day, the longest run since May, and increased as much as 1 percent to $1,120.02 an ounce.

Source: Azernews

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