In The News Today

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Jim Sinclair’s Commentary

I got huge amounts of hate mail when I suggested this in 2005.

Mexican central bank buys 100 tonnes of gold
By Jack Farchy in London
Published: May 4 2011 11:35 | Last updated: May 4 2011 20:37

Mexico has quietly purchased nearly 100 tonnes of gold bullion, as central banks embark on their biggest bullion buying spree in 40 years.

The purchase, reported in monthly data published by Mexico’s central bank, is the latest in a series of large gold buys by emerging market economies intent on diversifying reserves away from the faltering US dollar.

China, Russia and India have acquired large amounts of gold in recent years, while Thailand, Sri Lanka and Bolivia have made smaller purchases.

Central banks became net buyers of gold last year after two decades of heavy selling – a reversal that has helped propel the price of bullion to a series of record highs. On Wednesday gold was trading at about $1,510 a troy ounce, down 4 per cent from a nominal record high of $1,575.79 reached on Monday.

As a result of Mexico’s purchase, central banks, sovereign wealth funds and other so-called “official sector” buyers are on track to record their largest collective purchase of gold since the collapse of the Bretton Woods system, which pegged the value of the dollar to gold, in 1971.

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Jim Sinclair’s Commentary

This isn’t hard to believe.

China "Aims To Have More Gold Than America"
05/03/2011 10:30 PM HKT

THE CENTRAL BANKS of developing countries will Buy Gold at an increasing rate in coming years, with China being a leading player, according to a major industry figure.

Rob McEwen, founder and former head of Goldcorp, now the world’s fifth largest Gold Mining company, believes central bank purchases could help push the price of gold to $2000 an ounce by the end of the year.

"China is out to have more gold than America, and Russia is aspiring to the same,"said McEwen, who is now chairman and CEO of junior miner US Gold. "When you have debt, you don’t have a lot of flexibility. China wants to show its currency has more backing than the US."

According to figures from the World Gold Council (WGC), China’s gold reserves were worth $48.2 billion in March 2011. This compares to $372.2 billion for the US. Russia’s gold reserves were estimated to be worth $36.1 billion.

Central banks became net buyers of gold in 2010. The WGC reports that, over the past decade, European central banks alone have accounted for approximately 10% of the world’s annual gold supply, selling an average 388 tonnes a year. However, these sales "have virtually come to a halt" in the last three years, the WGC says.

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