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Huge gold purchase by Mexico's central bank: 100 tonnes
By Jack Farchy
Financial Times, London
Wednesday, May 4, 2011
http://www.ft.com/cms/s/0/cbc02e10-7637-11e0-b4f7-00144feabdc0,s01=1.html
The central bank of Mexico bought nearly 100 tonnes of gold in February and March, the latest emerging market country to turn to bullion as a means of diversifying away from the faltering dollar.
The purchase is one of the largest by a central bank in recent history. The gold, worth $4.6 billion at current prices, is equivalent to about 3.5 per cent of annual mined output.
The central bank has not been publicly announced the move but has reported it both on its own balance sheet, posted it online, and reported it to the International Monetary Fund's statistics on international reserves.
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Wall Street Journal Publishes Lewis Lehrman's Call for the Gold Standard
In its April 26 edition The Wall Street Journal published an important essay by the Lehrman Institute's chairman, Lewis E. Lehrman, explaining why a gold-convertible dollar is critical to eliminating the shocking federal deficit.
"Experience and the operations of the Federal Reserve System compel me to predict that U.S. Rep. Paul Ryan's heroic efforts to balance the budget by 2015 without raising taxes will not end in success -- even with a Republican majority in both Houses and a Republican president in 2012. ...
"What persistent debtor could resist permanent credit financing? For a government, an individual, or an enterprise, 'a deficit without tears' leads to the corrupt euphoria of limitless spending. For example, with new credit the Fed will have bought $600 billion of U.S. Treasuries between November 2010 and June 2011, a rate of purchase that approximates the annualized budget deficit. Commodity, equity, and emerging-market inflation are only a few of the volatile consequences of this Fed credit policy."
To read more, and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit:
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Central banks became net buyers of gold last year after two decades of heavy selling, a dramatic reversal that has helped propel the price of bullion to a series of record highs.
On Wednesday morning, gold was trading at $1,535 a troy ounce, down from the nominal record of $1,575.79 touched on Monday.
Mexico follows other booming emerging-market economies, including China, India, and Russia, which have all made large additions to their gold reserves in recent years.
Matthew Turner, precious metals strategist at Mitsubishi, the Japanese trading house, said the purchase "seems to confirm there's an appetite now among emerging economies with large forex reserves to add to their gold reserves. Gold is seen as one way in which to diversify away from the dollar- or euro-denominated assets."
The dollar has plunged 10 per cent since January against the world's major currencies and is trading near an all-time low. Robert Zoellick, president of the World Bank, has suggested that gold should form part of a new international monetary system.
China announced in 2009 that it had bought 454 tonnes of gold over the previous six years; India bought 200 tonnes of gold directly from the International Monetary Fund in October 2009; and Russia has bought just less than 400 tonnes on the open market over the past five years.
However, Mexico's buying in February and March, which amounted to 93.3 tonnes of gold, is one of the most rapid programmes of accumulation on record. Apart from India's off-market purchase in 2009, the 78.5 tonnes bought in March is the largest monthly purchase by a central bank in at least a decade, according to data from the World Gold Council.
The Bank of Mexico could not be reached for comment on Wednesday morning.
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Canuc Resources Pursues Ecuador and Nova Scotia Gold Projects
Canuc Resources Corp. (TSX: CDA) has confirmed high-grade gold and the potential for large-tonnage, low-grade copper and gold mineralization at its primary asset, property in the historic Nambija gold mining district in southeastern Ecuador.
Last November Canuc took an option on the Mill Village gold property in southwestern Nova Scotia, which includes two past-producing mines. Canuc plans to begin surface and underground exploration at Mill Village in the next several weeks, financed by $2 million recently raised through a private placement.
To generate immediate income, Canuc is acquiring MidTex Oil and Gas Co., owner of a producing gas well and a lease on 320 acres in Stephens County, Texas.
Canuc's CEO, Gary Lohman, has more than 30 years of experience in the mining industry, primarily as a geologist, and the company's officers include similarly experienced people.
For more information about Canuc, please visit http://www.canucresources.ca/.
