After the US: Venezuela, Brazil, and Mexico have the most gold reserves in the region

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According to the Trading Economics report, the United States continues to lead the amount of this metal on the continent.

Gold has been at the center of discussions due to its price increase, caused by tensions in the Middle East. Weeks ago, the bullion rose up to 1.2% to $2,400.67, while silver traded at its highest level since February 2021.

Globally, the country with the largest gold reserves remains the United States with 8,133 tons of this material, according to data presented by Trading Economics, followed by Germany with 3,353 tons, then Italy with 2,452 tons, France with 2,437 tons, and Russia with 2,333 tons.

In Latin America, the picture changes, as the reserves have reduced figures for this first quarter, compared to the world. Venezuela, Brazil, and Mexico are the countries with the largest reserves, with 161, 130, and 120 tons respectively.

Following these countries, according to Trading Economics, the top continues with Argentina with 61.74 tons; Bolivia (34.79); Peru (34.67); Ecuador (33.78); Paraguay (8.19); Guatemala (6.89) and Colombia (4.68) in 10th place.

What does it mean to have gold reserves?

According to Michael Ortegón, dean of the faculty of economic and administrative sciences at the Colombian university of Uninpahu, it is important to have gold reserves because banks operate with a fractional reserve system and these entities keep the reserved in large amounts of money.

Ortegón explained that in the Colombian case the importance is ‘minimal,’ since the national reserves are equivalent to 1.5% of the total. However, he explained that these values work in cases of crisis, such as recessions, because in these situations, banking entities like the Bank of the Republic see this material with ‘significant’ value and all other institutions that handle this type of monetary values.

The dean of the faculty of economic and administrative sciences of Uninpahu explained that, in Colombia, ‘there is a low dependence on gold, because its reserve system is based on paper currency and dollars. In this sense, the role that this material has in the system is a wild card that is traded in a market with speculative values, so its role is very basic in the Colombian economy.’

Laura Lizarazo, global risk analyst at Control Risks, added about the importance of reserves that it ‘lies in having a highly reliable value backup, which provides a secure support to economies facing cycles of great instability, uncertainty, or unexpected shocks (natural disasters, armed conflicts, severe productive contractions, inflationary crises, etc.).’

‘As the world moves towards a gradual but sustained detachment from the dollar as the dominant currency (due to trade tension between China and the United States, conflict fronts in Russia-Ukraine and the Middle East), it becomes a priority for central banks to diversify their sources of monetary backing. In this trend, gold is by excellence the safest option,’ she added.

The rise of gold

Spot gold rose 1% to $2,396.11 an ounce in London, representing the best advance since early 2023, while silver rose to $29.22 an ounce. Platinum and palladium also advanced even as the Bloomberg Dollar Spot Index traded near the highest level since November.

In 2023, gold and copper were the only commodities that showed profitability with 13.01% and 1.19% respectively.

“This was due to investors seeking a safe haven in the asset, moreover, a weaker dollar also boosted the demand for this metal.

The easing of interest rates by the Federal Reserve could be beneficial. ING projects that gold will reach new highs in 2024, with possible rate cuts supporting prices.”

Source: El Economista