Central banks expand gold reserves with $6b in purchases****

LONDON, May 5 (Bloomberg): 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 tonnes since January, increasing holdings from about 6.9 tonnes, 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 tonnes to 811.1 tonnes in March and Thailand expanded assets 9.3 tonnes 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 US 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. Gold for immediate delivery climbed to a record $1,577.57 an ounce on May 2, and traded little changed at $1,516.75 at 9:03am in Singapore. The price is up 6.8 per cent this year and has gained the past 10 years. Global holdings of gold by governments and official institutions such as the IMF stood at 30,523 tonnes by April, according to the World Gold Council.