Colombia Increases Gold Holdings as Kazakhstan, Mexico Cut
Colombia’s bullion reserves rose to 9.16 tons last month, according to data on the International Monetary Fund’s website. Kazakhstan cut reserves by 3.11 tons to 67.3 tons in the period, Tajikistan reduced holdings by 1.19 tons to 1.8 tons and Mexico’s assets fell 0.175 tons to 105.7 tons, the data show.
Central banks are expanding their gold reserves for the first time in a generation as purchases by billionaire investors including John Paulson contributed to bullion extending its longest annual winning streak since at least 1920. The metal climbed to an all-time high of $1,913.50 an ounce on Aug. 23 in London and has outperformed global equities, commodities and Treasuries this year.
“Central banks will continue to diversify their reserves,” said Filip Petersson, an analyst at SEB AB in Stockholm. The Federal Reserve “is obviously not closing the door for more money printing and it is therefore attractive to continue to diversify reserves. Central banks are looking for at least one true safe haven.”
Colombia’s increase in reserves was the first since a 100- ounce expansion in November 2007, the IMF data show.
Bullion traded at $1,835.15 an ounce by 5:30 p.m. in London and is up 29 percent this year. It’s heading for an 11th straight annual gain. Holdings of the metal in exchange-traded products climbed to a record 2,216.8 tons on Aug. 8 and were at 2,144.9 tons yesterday, data compiled by Bloomberg show.
Russia’s Bank Rossii said on Aug. 22 that the central bank raised gold holdings to 27 million ounces (839.8 tons) in July from 26.9 ounces at the end of June.
Central banks bought 192.3 tons of the metal in the first half, the World Gold Council said earlier this month. That may also be a warning. Prices rose to a then-record $850 in 1980 as central banks bought gold, only to drop for most of the next 20 years. Bullion tripled from 1999 through the beginning of 2008 as the banks sold more than 4,000 tons.
Minutes of the Fed meeting on Aug. 9 showed policy makers favored “more substantial” measures to boost the U.S. economy than the current pledge to hold rates at a record low for the next two years. The Fed bought $600 billion in Treasuries from November through June.
Global holdings of gold by governments and official institutions such as the IMF stood at 30,700.1 tons by this month, according to the World Gold Council.
Bullion accounted for 1.1 percent of Colombia’s total reserves, 3.8 percent of Mexico’s, 9.9 percent of Kazakhstan’s and 7.7 percent of Russia’s, according to the latest World Gold Council holdings report. The metal accounts for more than 70 percent of reserves of the U.S. and Germany, the biggest holders, the council’s data show.
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