23 July 2015

The Mystery of China’s Gold Reserves

It is being reported by multiple media outlets that last week the People’s Bank of China published figures on its Gold reserves for the first time since 2009. The official Gold reserves now stand at 1,658 metric tons, as of June.

For those of you who have been following this development, you’ll know that this figure is quite a bit lower than what has been estimated by many experts. China announced back in 2009 that its Gold reserves were 1,054 metric tons. The 57% jump since 2009 is a small increase when you consider the reports of Chinese Gold buying in the last few years.

Even Bloomberg Intelligence this year estimated that Gold reserves could triple to 3,500 tones based on domestic output, and China Gold Association and trade figures. (Source: Bloomberg: 2015 July 17th) 

Some analyst are suggesting that one of the reasons for Gold’s plunge on Monday was due to the market being disappointed at the low Gold reserve number from China.

What the Experts are Saying

Since this figure was reported on Friday of last week, we have looked into some of the possible explanations of why the number came in lower than many were expecting. 

Below is a link to an interview with Jim Rickards, who wrote the book “Currency Wars” and the “Death of Money”. Mr. Rickards maintains that data such as mining output from China as well as Hong Kong imports suggest that China has more like 3,000 to 4,000 tons of Gold. The video is about 3 minutes long and provides a good perspective on why China has more Gold than reported 

Link to Jim Rickards Video

Another perspective was recently offered by Frank Homes, CEO of US Global Investors, who was interviewed by Kitco news on July 20th. In the interview Mr. Homes said that:

  • The World Gold Council worked out years ago an important agreement. There lots of Dollar cost averaging through the banking system by the Chinese people buying a gram of Gold every paycheck. That is millions and millions of ounces. (Source: Kitco 2015 July 20th) 

 The retail Gold demand from millions of Chinese people is not likely a part of the reserve number.

In an article in Bloomberg, when referring to Chinese Gold, Robin Bhar, an analyst at Societe Generale SA in London, said the stockpile may eventually reach more than 5,000 tons. (Source: Bloomberg 2015 July 19th)

Do not read to much into the China official Gold reserve number. The China Gold story has a long way to go.

Author: celticgold.eu

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