Mexico to audit its gold holdings at the Bank of England ... The Mexican Government Audit Office has issued an official
statement, criticizing the Bank of Mexico for not auditing the gold it
has supposedly bought and stored at the Bank of England. The auditors
ask the Central Bank of Mexico to "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 compliance with the
terms and conditions of dealing with this asset." – Voice of Russia
Dominant Social Theme: Trust us. Just trust us.
Free-Market Analysis: The move toward auditing gold
holdings is getting more pronounced as we can see from this demand by
Mexico in the above article excerpt. German officials have asked the US
government for gold repatriation and so has Venezuela. Now it's Mexico's
turn to start the process.
The old era in which central banking trust was ingrained in the system is gone now – and the ramifications
are many even though they have not yet been felt. Central banks and
bankers rely on joint programs and coordinated currency approaches.
Without trust, strategies are difficult to create and programs are hard
to implement.
This is not a hypothetical observation. As gold prices have moved up
and Western currencies have looked increasingly subject to a currency
competition, the pressure on politicians to assure gold reserves has
increased. Couple this with the overseas storage of much gold reserves,
and the situation becomes combustible.
In the case of Mexico, questions have been raised about the country's off-shore storage of precious metals and its ability to take possession if necessary. These concerns have
been magnified by Germany's experience. Germany's Bundesbank intends to
repatriate a large portion of gold reserves abroad and by 2020 seeks to
have at least 50 percent of its total gold reserves at home.
This amount includes 300 tons from the Federal Reserve – which the US Fed may or may not have available. It is unclear, as the
Fed refused to submit to an audit of Germany's gold. The apparent
tension was compounded by the slowness of the repatriation. Germany will
get its gold but not for seven years.
As for Mexico, well ... there is a good deal of paperwork that must
be sorted out – and Mexico is in much the same shape as Germany
regarding overseas holdings of assets. Mexico's central bank owns gold
but it might be considered "paper gold" as the actual physical holdings
are not available. Here's more from the article:
