Mexico, Russia and Thailand added gold now valued at about $6 billion to their reserves in February and March as prices advanced to a record, the dollar weakened and Treasuries lost investors money.
Mexico bought 93.3 metric tons since January, increasing holdings from about 6.9 tons, according to data from the International Monetary Fund, and the nation’s central bank later said it purchased 100 tons in recent months. Russia increased reserves 18.8 tons to 811.1 tons in March and Thailand expanded assets 9.3 tons to 108.9 tons in the same month, the data show.
Central banks are expanding their gold reserves for the first time in a generation as purchases by billionaire investors including John Paulson contributed to bullion extending its longest winning streak since at least 1920. Countries were also boosting their holdings in 1980 when gold rose to a then-record $850 an ounce, only to fall for most of the next 20 years.
“Central banks have good reason to buy gold,” said Peter Morici, a professor of business at the University of Maryland in College Park and a former economic adviser to the U.S. government. “The dollar is no longer a safe asset for backing currencies. Treasuries are not a sound investment” and budget and debt issues mean central banks should buy gold, he said.