The Banco de Mexico bought 93.3 tonnes of gold bullion in February and March, according to data released by the International Monetary Fund. It had previously held 6.9 tonnes.
“We want to get the best risk-return balance in our investments,” Said Agustin Carstens, governor of Bank de Mexico. “Given the performance gold has had in the recent past, it turns out it would allow us to have a higher return without much risk.”
We haven’t seen a number like this since November 2009, when India purchased 200 metric tons of the International Monetary Fund’s gold.
Most of the Mexican purchase, – 78.5 metric tons – came in March, marking it the largest one-month accumulation by a central bank in a decade, according to the World Gold Council.
It’s important to note that central banks usually buy to hold, not for trade or profit. This gold is viewed as a monetary asset, held for the most extreme of national economic crises.
A decade ago central banks were net sellers of gold. But over the last few years we have seen many of these banks buying again – notably Russia, India, China, Mexico and Bolivia.
What does this mean?
For you and me, it means the real value of gold is being confirmed at a national, sovereign level. Yes, gold is money. Yes, gold is the kind of money you want to buy and keep, to protect a proportion of your wealth.
These buying sprees also mean the price of gold is likely to keep rising, in spite of occasional corrections along the way. Why? Because central bank buying takes large quantities of gold out of the market.
With less gold to buy at the retail level the laws of supply and demand start pushing the price up.
If you don’t yet own gold, now is the time to start buying.
You can buy gold coins and gold bars online at GovMint.com.