* Mexico ups gold reserves by over 90 tonnes in two months
* Mexic onow ranks 33 among official holders of gold
(Changes dateline, pvs LONDON; adds comment, details)
By Dave Graham
MEXICO CITY, May 4 Mexico massively ramped up
its gold reserves in the first quarter of this year, buying
over $4 billion of bullion as emerging economies move away from
the ailing U.S. dollar, which has dipped to 2-1/2-year lows.
The third biggest one-off purchase of gold by any country
over the past decade took Mexico's reserves to 100.15 tonnes --
or 3.22 million ounces -- by the end of March from just 6.84
tonnes at the end of January, according to the International
Monetary Fund and Mexico's central bank.
Gold has gained 11 percent this year, driven by concern
over euro zone debt and the violence in the Arab world, as well
as by the U.S. dollar's 7.6 percent decline against a basket of
Sergio Martin, chief economist for HSBC in Mexico, said the
government probably saw gold as a highly liquid asset that
would reduce exposure to the falling greenback.
"They're probably thinking that getting out of dollars and
into gold makes sense because we know that the dollar has some
trend to depreciate in the near future at least," said Martin.
"I don't think they're going to lose money with this."
Mexico's foreign currency and asset reserves hit a record
$128 billion in April, making the gold purchased mostly in
February and March worth nearly 4 percent of that total.
Mexican central bank data on gold holdings only exists through
The central bank did not respond to a request for comment.
Graphic on Mexico's
central bank gold stocks: r.reuters.com/vyz39r
According to the International Monetary Fund, Latin
America's No. 2 economy now owns $4.93 billion worth of gold
XAU=, which hit a record $1,575.79 an ounce on Monday.
Other emerging economies such as China, Russia and India
have also beefed up bullion reserves over the past few years.
Credit Suisse precious metals analyst Tom Kendall said it
was worthy of note that Mexico, whose economy is very closely
tied to the United States, had taken this step.
"The size (of the purchase) is certainly pretty chunky to
have been accomplished in that space of time. So it certainly
gives another sizable layer of support to gold's position in
the international reserves system," he added.
George Milling-Stanley, managing director of government
affairs at the World Gold Council industry group, said Mexico
was following a recent trend among central banks to restore a
"prior balance between gold and currency reserves."
"This is further supported by the fact that the May IMF
numbers show continued buying by Russia and Thailand of 18.8
tonnes and 9.3 tonnes respectively," he added.
Mexico's reserves rank it 33rd among the top official
holders of gold. The United States is the largest official
holder of gold, with 8,133 tonnes, which account for 73.8
percent of its total international reserves.
China is the sixth largest holder of gold, with 1,054.1
tonnes, or just 1.6 percent of total reserves, while
eighth-ranked Russia now has some 811 tonnes of gold, up from
788.78 in January, according to the IMF data.
Silver, which hit a record price earlier this year, may
also have been on Mexico's buying list, said Martin at HSBC.
"I think Mexico has moved from second to first place in the
list of global silver producers, so they may have been buying
silver to help the price," he added.
(Additional reporting by Amanda Cooper in London and Jason
Lange in Mexico City; Editing by Kieran Murray and Cynthia