Mexico's Federal Auditor Recommends physical audit of gold holdings

Now Mexico is proceeding to join the 'gold rush'.  That is the rush to audit their physical gold holdings and move it back to sovereign soil.  Over the last several months many countries have officially and publicly stated their intent to audit their gold holdings.   Germany recently decided to move all of their gold located in Paris and some of their gold in London and New York back to Germany.  And, Venezuela recently moved their gold from London back to sovereign ground.  

Mexico currently stores about 95% of its gold abroad and 99% of that in London.  Why does Mexico keep over 120 tons of gold in London?  London is the home of the London Bullion Exchange where precious metals are traded.  I doubt that Mexico is considering selling.  So, the only reason I see is that Mexico is so corrupt that they do not trust each other to safe guard their own gold!  But, if they are really that corrupt  storing it abroad does not really help.  The gold can always be transferred to other accounts while abroad.  Maybe that is what has already happened.  Mexicans get your gold, if it has not already suffered the same fate as that land north of the Rio Grands!  Germany is already in line ahead of you!  

Mexico wants to audit its gold holdings abroad

Can you imagine how the average US citizen would react if their country's gold was stored abroad?  And, even if Mexico keeps their gold abroad would it not be prudent to conduct regular physical audits?  Why are the central banks so reluctant to insist on physically auditing their gold?  

If London or any other bullion vault does not have all the physical gold that its depositors own they will be forced to cash settle for any shortfall if there is a run on their vaults.  And, you can bet that the cash settlement will be based on the market price ($/ounce) from before the run.  So the bank nor the depositor will not be able to buy all the missing physical metal on the market because prices for physical will jump as soon as the run starts.

There is precedent in the US, even: cash settling for an amount set before a run is very similar to what US President Roosevelt did in the 1930's when the US dollar was removed from a gold standard.  Also, central bank stone-walling physical audit efforts is not just a foreign affair.  Representative Ron Paul has been trying unsuccessfully for many years to audit US holdings at Fort Knox and the US Fed Reserve.