The long-held suspicion that China has been hoarding gold was confirmed today and sent the price of bullion up. Reuters news agency confirmed that Chinas head of the State Administration of Foreign Exchange (SAFE) said the countrys gold reserve had jumped to 1,454 tonnes from 600 tonnes in 2003, a rise of 76%. The total value of Chinas gold is a cool US$30.9 billion. At the time of this writing, the spot price of gold is up $9.40/oz from Thurday’s close to $914.20.
With todays revelation, China is now the fifth-largest holder of gold by country, surpassing Switzerland, Japan and the Netherlands. It is the seventh-largest holder of gold in the world, with the International Monetary Fund and the SPDR Gold Trust exchange traded fund holding more. China is the worlds largest producer of gold.
China is expected to buy more gold with its almost $2 trillion in savings as it builds reserves and tries to build the countrys buying power. With the IMFs decision last year to sell 403 tonnes of gold from its holdings, this could be an opportunity for China to boost its gold holdings quickly. IMF gold sales, however, need ratification from its member countries, including the United States.
With the suspicion confirmed that China has been buying gold and will likely continue to do so this just adds to the gold bugs case for investors to continue to flock to the safe-haven metal.