Latin American Central Banks Turn To Gold

Latin American nations are increasing the percentage of national reserves in gold amid global financial uncertainty, contributing to the metal’s rise to above US$1,900 an ounce in mid-September.

The region accounts for one-fifth of the world’s gold production, but Latin American countries hold just 2.2 percent — 680 million metric tons — of the world’s gold reserves of 30.7 million metric tons.

Amid the European and US debt crises, Central Banks have been buying more gold, as doubt over the value of the US dollar and other currencies increases.

The US dollar dropped 26 percent between 2000 and 2010, but gold prices increased close to 250 percent.

Mexico increased its reserves from 7.3 metric tons in January to 106 in July, while Bolivia increased its gold reserves from 28.3 metric tons to 35.3 tons in the same period. For its part, Venezuela ordered 58 percent of its gold reserves in the United States and Europe to be repatriated.

According to the World Official Gold Holdings at two-thirds, Venezuela has the largest portion of its reserves in gold in the region, and the country ranks 15th in gold reserves.