The value of the gold reserves of the Bank of Mexico (Banxico) reached a record high in March, the same month in which the price of the metal reached its highest level since August 2020.
Banxico’s gold reserves had a value of 7,654 million dollars in the third month of the year, their highest level since Banxico’s registration began in 2000.
Compared to the immediately previous month, the value of the reserves increased 8.48 percent.
It exceeded the previous all-time high that reserves had touched in July 2020, which was 7.580 million dollars.
The volume of gold reserved by Banxico was 120.25 tons, a slight decrease compared to the 120.28 tons reported in February 2023.
As there are no relevant changes in the volume of reserves, the growth in value is explained exclusively by movements in the international price of the metal.
In early March, the spot gold price reached a maximum of $2,070.29 per ounce, a level not seen since August 2020, amid uncertainty in financial markets due to the collapse of regional banks in the United States.
Analysts have explained that gold, due to its intrinsic value, is considered a refuge asset whose demand increases considerably when there is nervousness in the market.
“When there is a drop in the price of gold, it is because there is less demand in general, but at the end of the day, gold has an intrinsic value, that is, the value of gold for being gold,” explained Ana Azuara, a Materials analyst. Premiums in Banco Base.
He affirmed that even when money loses value due to inflation or economic activity falls, gold will not lose its value, hence it is an asset in which investors have historically taken refuge in times of crisis and uncertainty
Currently, the precious metal par excellence has a market value of 13.4 trillion dollars, which makes it the most valuable asset in the world, according to data from the Companies Market Cap portal.
The market value of gold is obtained by multiplying its current price (2,020.96 dollars per troy ounce) by that of the metal stocks that exist above the surface, that is, they have already been extracted.
At the end of 2022, there were 208,874 tons of gold stocks above ground, according to data from the World Gold Council (WGC).
Gold is one of Banxico’s official reserve assets. Of all its international reserves, whose value in March was 206,313 million dollars, gold represents only 3.71 percent.
Near all-time highs
In April, the price of the precious metal continued to trade high and just at the beginning of this month it touched a record high not seen since August, so it is foreseeable that the value of Banxico’s reserves will continue to rise.
The spot gold price reached a ceiling of 2,073.29 dollars per ounce last Thursday, May 4, very close to the historical maximum of 2,075.47 dollars registered on August 7.
The milestone occurred on the same day that the United States Federal Reserve (Fed) increased its interest rate by 25 basis points and gave signs that it could be its last increase in the cycle of restrictive monetary policy that began since last year. past.
Ana Azuara explained that the possible brake on rate increases is positive for gold, since the metal has an inverse correlation with interest rates, in which, the higher the rate, the less attractive it is. raw material, and vice versa.
“I think it is very likely that it will exceed the all-time high of August 2020, it was already close to touching it. If the US economy falls into recession, even a moderate one, I do see gold exceeding the all-time high of $2,075,” said the Banco Base analyst.
Mexico, in place 35
Among central banks around the world, Banxico ranks 35th in volume of gold reserves, with a collection of 120.25 tons, according to data from the WGC.
The United States Fed is the institution with the largest reserves, with 8,133.5 tons of the precious metal, while the Central Bank of Germany ranks second with 3,354.9 tons.
In third place are the reserves of the International Monetary Fund (IMF), with 2,814 tons; In fourth place is Italy with 2,451.8 tons, while France is in fifth place (2,436.8 tons).
The other countries that are within the top 10 are: Russia (2,326.5 tons), China (2,068.4 tons), Switzerland (1,040.0 tons), Japan (846.0 tons) and India (794.6 tons).
Mexico is surpassed by Spain (281.6 tons), Brazil (129.7 tons) and South Africa (125.4 tons).
