Central banks 'keen to retain gold'

24 August 2011

Central banks would be eager to retain their gold holdings rather than offload them in order to help fight against a debt crisis, it has been claimed.

Peter Richardson, chief metals economist at Morgan Stanley Australia, which has been operating in the southern hemisphere country for more than 50 years, said the lenders - who are the first net buyers of the commodity in a generation - are aware that buying back the metal once they have sold it is likely to prove very expensive, Bloomberg reports.

The industry figure explained: "They would rather have the backing of a rising asset within their reserve portfolios than use it to reduce debt."

His comments came as gold reached record value this week - and Mr Richardson noted institutes are more inclined to keep hold of their gold reserves when the risk of debt escalates because they only have one shot at selling.

As well as the central banks, South Korea, Russia, Mexico, Kazakhstan and Thailand are among those that have increased their gold reserves in 2011.

By Claire Archer

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