Chinese Gold Reserves Announced

After years of speculation since China last announced its official gold holdings in 2009 (1054 t) they shocked the world on Friday with an updated holding of ‘just’ 1658 tonne.  Whilst this is a 57% increase it is considerably less than nearly all estimates.  Bloomberg Intelligence this year estimated 3,500 tonne and some gold analysts were anywhere from 5,000 to 12,000 tonne.  Why?  Well apart from being very secretive for the last 6 years China has also in that time become both the biggest net importer and biggest producer (all of which they keep) of gold in the world.  They have also been overtly making moves to internationalise their currency (Yuan/Renminbi) raising speculation of an end play of becoming the reserve currency and backing that with gold to differentiate it from the flawed US Fiat reserve currency.  They were due to make this announcement before October when the IMF decides on whether to include the Yuan in the SDR (standard drawing rights) IMF based alternative ‘reserve currency’.

The holding places what is now the like-for-like largest economy in the world at only the 5th largest holder of gold (U.S. (8,133 tonnes), Germany (3,383 tonnes), Italy (2,451 tonnes) and France (2,435 tonnes)).

Whilst few seem to believe the number, the speculation is rife on “Why?”.  The most plausible is that they just want to keep buying at these ridiculously low prices and didn’t want to spook the market up with a big announcement.  One thing for sure is the Chinese are strategic long term players and they will have their reasons.  For the rest of us, it just prolongs this once in a life time buying opportunity.