LATIN AMERICA & MEXICO

Gold bug spreads through Latin America

BY: Cecilia Jamasmie | December 10, 2012

LATINAMERICAGOLDBUG

In the wake of widespread reports pointing at central banks rushing to restock their coffers ever since the German government submitted gold demands to London and New York bankers, Latin American countries seem to also be catching the gold bug.

Mexico leads the way, buying close to 100 tonnes in a couple of months last year. Now Brazil has increased its gold reserves for the second straight month, reaching the highest level in 11 years, as data from the International Monetary Fund shows.

Brazil, home Latin America’s largest economy, seems to have much further to go, as gold still accounts for a mere 0.8% of its reserves.

In addition to Brazil, others nations including Colombia, Mexico, Argentina and Paraguay have recently been adding to their bullion holdings. And this might be only the beginning.

“A wave of gold-buying among Latin American central banks is likely to be of less significance to the market than the trend in Asia has been, simply because a larger proportion of the world’s reserves are held by Asian countries,” writes Financial Times columnist Jack Farchy (subs. required).

He adds that fresh acquisitions coming from Latin America could help keep the current pace of roughly 500 tonnes a year – equivalent to the jewellery consumption of Europe and North America combined.

WHAT I SEE:

I BELIEVE WITHIN 7 YEARS THAT LATIN AMERICA (MOSTLY MEXICO) WILL BE ONE OF THE WORLDS LEADING PRODUCE PRODUCERS.

GNS+RESEARCH