MEXICO'S Central Bank has been Buying Gold as a means of reducing its exposure to currency depreciation risks, say analysts.
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.
The central banks of Russia and Thailand also made significant gold purchases over the same period, of 18.8 tonnes and 9.3 tonnes respectively.
"Gold is seen as one way in which to diversify away from the Dollar- or Euro-denominated assets," said Matthew Turner, precious metals strategist at Mitsubishi, the Japanese trading house.
Bayram Dincer, Pfaeffikon, Switzerland-based analyst at LGT Capital Management, which has $100 billion under administration, agrees.
"Mexico's gold accumulation confirms the demand of emerging market central banks to diversify their reserves," he said. "They will be the big buyers for years to come."
Mexico's reserves of foreign currency have grown rapidly over the last two years. In August 2009 its international reserve was valued at $72.6 billion. That had risen to $125.8 billion by the end of last week.
Meanwhile there have been suggestions that the central bank of Portugal could sell some of its Gold Bullion to relieve its sovereign debt pressures.
German newspaper Passauer Neue Presse reported that Norbert Barthle, budget spokesman for the Christian Democrats, and Carsten Schneider of the opposition Social Democrats, want to include gold and other assets in an assessment of how much aid to give Portugal.
"If you start including assets like these that are not normally factored into measures of debt, mobilizing the resources could improve the position of these countries to a significant degree," noted Rob Carnell, chief international economist at ING Bank.
However, selling gold to alleviate debt pressures may be counterproductive.
"There is zero chance of any gold sales," said Philip Klapwijk, chairman of precious metals consultancy GFMS last month, when asked whether Eurozone members might take such a course of action. "The signal this would send to the market...would be an act of folly."
Are you looking to diversify your portfolio by Buying Gold? BullionVault gives you access to live markets 24 hours a day, plus safe, low cost storage...