LAWRIE WILLIAMS: China gold reserves remain unchanged for 17th successive month
According to the latest figures from the People’s Bank of China – the country’s central bank – the nation’s gold reserves remained unchanged in size for the 17th successive month at 59.24 million ounces (1,842.6 tonnes). This reported gold reserve has remained unchanged ever since the Yuan was admitted as a 10.92% constituent of the IMF’s Special Drawing Right in October 2016. Prior to that the country reported monthly gold reserve increases for 16 months only, before which it only announced its gold reserve increases at multi-year intervals, maintaining that it had been holding this gold in non-reportable accounts. The feeling is that the country has reverted to this kind of non-transparent reporting pattern and that it has thus been building its gold reserves surreptitiously anyway. (See: China gold reserve increases – back to the bad old days).
According to this official figure, as reported to the IMF, China has fallen to 6th place among national holders of gold, having dropped behind Russia which has been building its gold reserves at around 200 tonnes a year plus. China remains comfortably the world’s largest gold producer while Russia is either in second or third place depending on whose figures one takes.
We are firm believers that China is indeed still building its gold holdings in what it continues to see as non-reportable accounts – probably at a higher rate than indicated in past official pronouncements - and may already have surpassed the gold tonnages held by European nations Germany (3,373.6 tonnes), Italy (2,451.8 tonnes) and France (2,436.0 tonnes) on its way to matching, or exceeding, the 8,133.5 tonnes believed to be held by the USA.
Both China and Russia seem to be of the opinion that gold still has a major role to play in any future global financial reset – and presumably the Americans and Europeans believe this too otherwise why hang on to their big reserves of the precious metal. They may well see gold as a stabilising influence in a time of currency parity volatility and instability which, perhaps, should be a lesson for the investment public.
Gold should probably thus be seen as a wealth protector rather than a speculative commodity. Leave speculation to the equity markets or bitcoin, although we wouldn’t recommend either at this point in time given their potentials for further weakness.