Banxico’s gold reserves lose 3% of their value in 2022

The value of the gold reserves of Banco de México (Banxico) decreased 3.03% during 2022, due to the drop in the international price of the precious metal due to the increase in interest rates and the strength of the dollar.

According to Banxico’s International Reserves Report, the Mexican central bank had 109.3 tons of gold at the end of November of this year for a value of 6,758 million dollars

At the end of 2021, the Bank of Mexico had 109.4 tons of the precious metal, but at that time the value amounted to 6,969 million dollars.

The gold volume it only decreased 0.13% in that period, so the drop in the value of the reserves is mainly explained by the reduction in the international price of the raw material.

Between the end of 2021 and November 2022, the price of gold futures fell 3.81% from 1,829.70 to 1,759.90 dollars per ounce, this as interest rates have increased significantly to contain inflation and that the dollar has strengthened.

Ana Azuara, a commodity analyst at Banco Base, explained that the price of gold has an “inverse correlation” with interest rates and the US dollar.

“On the dollar side it is basically because it makes the commodities more expensive for those who hold other currencies and reduces the value of raw materials. And the rates because it makes the opportunity costs of maintaining investments in commodities increase, since no raw material earns interest, so people look for assets that do give them ”, said the Banco Base analyst.

It was in March 2022, when the price of gold hit a two-year high above $2,000 per ounce, that the value of the reserves also reached its highest level since 2020 (7,488 million dollars).

Since that peak, its value has fallen 9.74% or $729 million.

They recover 7% in November

Despite the losses in the year, Banxico’s gold reserves managed to recover 6.87% of their value in November compared to the value they had a month earlier, thanks to the fact that the prices of the precious metal also rose in the penultimate month of the year.

Just in October, the value of gold reserves hit its lowest level since March 2020, sinking to 6.324 billion dollars, after the international gold price hit a two-year low.

In November, gold futures rose 7.27% due to increased risk aversion globally.

The gold price It had another monthly rise of 3.77% during December, so it is possible that there will also be a similar recovery in the value of Banxico’s reserves during the last month of 2022.

Gold reserves represent only 3.34% of the total international reserves of the Bank of Mexico, which amounted to 202,241 million dollars at the end of NOVEMBER 2022.

87.91% of total assets (177.795 million dollars) are foreign currency reserves, while the remaining 9.45% (19.115 million dollars) are reserves of the International Monetary Fund (IMF) to which Banxico has access.

In addition, in November the reserves had an outflow of 1,427 million dollars for financial derivatives.

Mexico, second country in LA with more gold

According to World Gold Councilthe Bank of Mexico is the country number 35 in terms of the amount of gold reserves in the world, only surpassed in Latin America by Brazil (129.7 tons).

Central bank reserves totaled 36,746 tons of gold in December 2022, according to the World Council.

Juan Carlos Artigas, director of research at the World Gold Council, explained that there are two main ways in which gold can be acquired: through the over the counter (OTC) market or through the derivatives market, such as the MexDer from the Mexican Stock Exchange or the Chicago Futures Market.

“Most central banks buy physical gold through the market OTC and there are different places where they normally keep it,” he explained.

He said that although there are central banks that keep part of their reserves in their own vaults, many choose to store a good part of the precious metal they have in the United States Federal Reserve (Fed) Or the Bank of England.

The Fed is the central bank that has the largest amount of reserves in the world, with 8,133.5 tons at the end of October 2022. In addition, of all its reserves, it is the one that has them in gold in a greater proportion (65.9% of the total). .

Germany is the second country with the most gold reserves, with 3,355.1 tons (64.9% of its total reserves), followed by Italy with 2,451.8 tons (62.2%), France with 2,436.8 (57%), and Russia with 2,298.5 tons (19.6%). ), the latter with figures as of January 2022.

For its part, the International Monetary Fund has one of the largest gold reserves in the world with a heritage of 2,814.0 tons.

Juan Carlitos Artigas added that around 150,000 million dollars are traded daily in the gold market.

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