Online): China is on a gold buying spree these days. The Chinese
central bank‚ÄĒthe People‚Äôs Bank of China‚ÄĒis taking a series of steps to
increase its gold reserves to ensure that the precious yellow metal
replaces forex reserves held in the US dollar.
Chinese people in
cities, small towns and rural areas are buying gold jewellery, gold
coins and gold bars for investment like never before. Gold jewellery
showrooms are mushrooming across the Chinese hinterland.
last few months, there have been talks of China following India in
buying gold reserves from the International Monetary Fund (IMF). So
when IMF announced that it would be selling its remaining 191 tonnes of
gold in the open market, several bullion analysts predicted that China
would somehow jump into the fray and buy IMF gold. Both China and India
are competing in the global bullion markets to be the largest consumers
and importers of gold.
Despite the gold buying frenzy that China
finds itself in these days, the dragon country has not been able to
come anyway near the United States in gold reserves. America has the
largest gold reserves in the world. The US gold reserves stands today
at 8,133.5 tonnes.
But will China be able to beat the US in gold
reserves? Though China has been proclaiming that the country will mop
up its gold reserves to a whopping 10,000 tonnes in the next 10 years
in an apparent suggestion that China wants to overtake America in gold
holdings, it is not going to be an easy task. It is, in fact, going to
be very tough for China to beat the US in the gold reserves game.
bullion analyst Ji Zhang, it is going to be a very difficult task for
China to overtake the US in gold reserves. ‚ÄúCurrently, China‚Äôs gold
holdings are around 1054 tonnes. In the last 10 years, China has
managed to increase its gold reserves only by a little over 550 tonnes.
So I find it difficult to understand how China is going to build the
so-called massive 10,000 tonnes of gold reserves,‚ÄĚ Zhang points out.
says to overtake the US in gold reserves, China needs to add around 800
tonnes of gold every year for the next 10 years. ‚ÄúIt is going to be a
very tough task. Going by the present trend of China‚Äôs plans of mopping
up gold reserves, nothing much has happened in the last six months,
except for lots of hype and less reality,‚ÄĚ Zhang said.
surprised why China has kept mum all these months when it had the best
opportunity to buy the IMF gold on sale. ‚ÄúIMF announced one year back
that it was selling 403 tonnes of gold. While India showed real, golden
valor and business acumen by buying 200 tonnes of gold, China has kept
a long silence. It looks China wanted to buy IMF gold cheap, say below
$1000 per ounce. But it is unlikely that China will be able to get IMF
gold so cheap,‚ÄĚ he added.
In the last three decades, China has
not been doing much to increase its gold reserves. In 1981, China had
395 tonnes of gold holdings; it increased to 500.8 tonnes in 2001, and
600 tonnes in 2002. In April 2009, China officially announced that it
has increased its gold holdings to 1054 tonnes. Since then, it has been
reported that Chinese officials and People‚Äôs Bank of China have been
meticulously chalking out plans to build up gold reserves in the next
According to the China Gold Association (CGA),
India‚Äôs decision to buy IMF gold has been the real boost for China‚Äôs
recent spirited moves to step up gold reserves.
China is eager to build up its yellow metal reserves in view of the declining US dollar value.
back Ji Xiaonan, head of the supervisory committee at the state-owned
Assets Supervision and Administration Commission recommend that China‚Äôs
gold reserve should reach 6000 tons in 3~5 years, and probably reach as
high as 10,000 tons in 8~10 years.
Yes, going by Ji Xiaonan idea,
China could beat US in gold reserves in 10 years. But for this, China
needs to open up new gold mines, aggressively go for gold mining, buy
gold from the open market.