The News
The News
Tuesday 09 of August 2022

Gold Reserve

Gold coins,photo: Public domain pictures
Gold coins,photo: Public domain pictures
Banxico had to confess that up to 3,905,000 troy ounces of gold are in a vault in Great Britain

Top-secret Mexico’s Central Bank (Banxico) has tried hard to keep from the national public the gold reserves that the nation boasts.

Nevertheless, now that Banxico director Agustín Carstens has decided to accept a new job as the head of the Bank for International Settlements (BIS) with offices in Mexico City, finance journalists are demanding that Carstens reveal the whereabouts of the gold, lest, grim jokers claim, he is going to trade it for glass beads, just the way the Aztecs did with the Spaniards back in 1521.

No doubt Mr. Carstens would not do this, but he’s tried hard to keep the whereabouts of the reserves a secret. But he had to finally cede and confess that they are not in a Mexican vault and that the great majority is in Great Britain.

The story of the current reserves of gold the Mexican government owns begins in 2011 when the former president Felipe Calderón Administration made fine use of the cash that came from oil sales and bought 100 tons of gold. That was big news at the time.

But immediately, Banxico refused to reveal where the gold was, causing both stupor and fear that the abundant cadre of crooked politicos would make booty of such a large amount of metal.

As usual, Banxico had excuses for not confessing. “Given to the content variability of gold in the ingots, the exact number of ingots bought cannot be specified.”

Forbes journalist Guillermo Barba says that it was suspected back then that it was all “imaginary gold” placed in unallocated account somewhere around the world.

Barba along with other journalists appealed to the then incipient Law of Transparency in 2012, given the fact that the news broke out that Banxico had bought another 20 tons of pure gold. It was time for the public to find out where it was and that Banxico, without proper vaults in Mexico, had nowhere to hide it.

Banxico had to confess that up to 3,905,000 troy ounces of gold, then equivalent to $4.139 billion dollars, and which represented 98.3 percent of the total amount, were — and still are — in a vault in Great Britain. The remainder is both in Mexico and the United States, which means, there’s very little metal allocated in Mexico. This information was officially issued by Banxico.

Could the Queens’ pirates steal this gold? That’s the fear Barba and other journalists have, but it probably will not happen nowadays.

But now that Carstens has resigned to the Banxico directorship, says influential columnist of La Jornada Enrique Galván Ochoa, who has been one of the stiff critics for having the gold reserves in a British vault, (it’s not exactly known which bank gets over 112 pounds a year to safeguard it) Congress should audit Carstens tenure at Banxico and make sure that Banxico “proves the physical existence of the metal,” as demanded in 2013 by the Supreme Auditing Office of the Chamber of Deputies.

And before he skips ship, Galván Ochoa, an old time friend of mine and long-time financial wizard, says, “Carstens must tell the true story of the gold from start to finish.”

Most financial expert say that half the amount of the existing gold should be stored in the Banxico vault and leave the rest in England for an emergency.

The reason is that “you can’t trust anyone with gold” and with such a weak peso and diminishing dollar reserves ($22 billion in the past four years from $199 to $1977) this would surely build up investor trust in the economy.

Will Carstens inform the press of the gold reserves before July 1 when he leaves office? Or is he taking the secret (let’s hope not the gold) with him?

We’ll find out soon!