Bank of Mexico Ordered to Physically Inspect Foreign-Held Gold Reserves

February 27th, 2013 by


The financial blogs are abuzz with news regarding Mexico’s gold reserves which are held in the Bank of England. Mexican financial reporter and accountability watchdog Guillermo Barba reports on his blog that the federal Auditor’s office of Mexico has responded to his complaint regarding the Bank of Mexico’s purchase of $4.5 billion in gold, stored at the Bank of England. Barba says that the Bank of Mexico’s purchase was “paper gold” and the contract does not even specify the number of bars or their purity, much less give any serial numbers.

Last year, Barba took the Bank of Mexico to court to force it to reveal the location of Mexico’s gold reserves. Records revealed that 95% of Mexico’s gold is stored abroad, and 99% of that is in the Bank of England. 100 tonnes of the 125 tonnes of foreign reserves were purchased in 2011. This is the transaction Barba complained about:

In its report, the ASF (Federal Auditor’s Office) says that a confirmation of the operation was made with the counterparty, but also “found that Banxico has not conducted physical inspections to gold to verify compliance with the terms of acquisition and the conditions regarding its storage, in order to be certain of the physical custody of this asset.”

The Bank of Mexico stated that they could not supply information on the numbers or purity of the government-owned gold held in foreign banks, which is against the law. Again, from Barba’s blog:

Nevertheless, the ASF has insisted under its official “recommendation” number 11-0-98001-02-0154-01-001 (they made only two recommendations, and this was the first): Bank of Mexico should “make a physical inspection with the counterparty that has the gold under its custody, in order to be able to verify and validate its physical wholeness and the compliance with the terms and conditions of dealing with this Asset…” It was verified by the ASF that this has never been done by Banxico.

One wonders if the result of this revelation will be a call for gold repatriation by the Mexican people?

Read the entire report here (