china gold

At last, China has officially announced it’s gold holdings for the first time since 2009.

The statement came out on Friday and shows that “officially” China now holds 1,660 tonnes of gold reserves, that’s an increase of 604 tonnes since the last public disclosure six years ago.

Given the huge volumes of gold passing through Hong Kong and Shanghai there is much speculation that the latest announcement has massively understated the true amount of physical gold that China has amassed over the last six years. The latest announcement is aimed aimed at improving China’s chances of IMF membership, designed to secure China’s position as a reserve currency, without spooking the markets and boosting the gold price. If that’s the case it’s a very clever move and besides, how would we ever know?

How much gold does China really hold?

Whilst the People’s Bank of China (PBOC) may well hold 1,660 tonnes of gold we must remember that China also owns gold through the State Administration of Foreign Exchange (SAFE) and the China Investment Corporation (CIC). Between the three of them it would not be surprising to learn that China has double or even triple the amount of gold the PBOC now claim.

This latest announcement means, that even on these figures, China has now moved ahead of Russia and the gold holdings it claims now put it in fifth position globally. America is still in number one position with a claim of 8,133 tonne although we need to remember that the US claim is probably as suspect as the Chinese announcement since there has not been an audit of US gold holdings for sixty years.

China clearly wants a seat at the IMF right now – and that’s a logical step for a currency that currently struggles on the international stage.

The announcement would appear to be made to support China’s aim of joining the IMF and being one of the currencies in the so called basket of SDRs or Special Drawing Rights. The objective here is to make the Renminbi fully convertible and a true international reserve currency.

The Chinese have no need to upset the current order but of things but this latest announcement is a natural step in the continued expansion of China’s global currency ambitions. As the rest of world spirals into even further debt, the Chinese are keen to show off the strength of the RNB.

China buys gold mines around the world

Meanwhile, it is no secret that China is buying hundreds of gold mines around the world. In particular, the Chinese are buying gold mines in South America and Africa where prices remain extraordinarily low due to the suppressed gold price.

However, despite the latest announcement, China’s massive foreign exchange reserves mean they hold less than 2% of their wealth in physical gold. It’s a unique position that no other country can even hope to match. As debt in the West spirals out of control it’s only a matter of time before China makes it’s next move towards total currency domination.

For me the writing is on the wall. If gold is good enough for mighty China, it’s certainly good enough for me. I urge everyone to hold some physical gold and some physical silver as a way of protecting your wealth in the future.

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