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People's Daily Online>>China Business

China urged to increase holdings of gold

By Wang Xiaotian (China Daily)

13:31, December 27, 2011

Gold displayed at a shop in Shanghai. As of December, China ranked sixth worldwide in gold holdings, with about 1,054 tons, says a report released by the World Gold Council. (Photo / China Daily)

BEIJING - China should further diversify its foreign-exchange portfolio and make more gold purchases when the metal's price dips but is still at a relatively high level, a senior central bank official said on Monday.

"The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation," said Zhang Jianhua, director of the research bureau affiliated with the People's Bank of China (PBOC).

He made the remarks in an article in the Beijing-based Financial News, a newspaper run by the PBOC.

The spot gold price declined 16 percent over the past three months to less than $1,600 an ounce last week. It touched a record of more than $1,900 in early September.

Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors' confidence. He said that gold had become the only "safe haven" for risk-averse investors. "No asset is safe now. The only choice to hedge risks is to hold hard currency - gold."

Zhang didn't specify what proportion of China's $3.2 trillion foreign reserves should be held in gold.

China is the largest foreign holder of US Treasury securities, having invested about one-third of its foreign reserves in those bonds. About 20 percent has been invested in euro-denominated assets.

As of this month, China ranked sixth worldwide in gold holdings, with about 1,054 tons. The value accounted for about 1.8 percent of the country's total foreign reserves, according to a report released by the World Gold Council (WGC).

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Leave your comment8 comments

  1. Name

PD User at 2012-01-05206.116.103.*
agree.!! at least silver can be use on industrial purpose.
Nic at 2011-12-30115.135.75.*
China should start retrieving its gold kept overseas just like the Venezula"s President did recently. It is always safer with the possession at home like the old saying "A bird in hand is worth many in the bush".Gold is only one form of investment. The other important ones are on human development, environment and infrastructure development. China has a lot to spend on improvement in these areas rather than concentrating on gold only as gold can be "played" about in many ways by unscruplous traders overseas.
PD User at 2011-12-29206.116.103.*
China should buy industrial precious metal like silver platinum etc ..... Especially silver at the recent prices. ~50% below its all time high. Silver has been used historically by China n Rome as reserve currency. Since US dollar has gold n military to back it up,RMB needs stronger manufacture-production n more silver to back up this fiat currency.
PD User at 2011-12-29220.255.2.*
What I means is 1% of the rich AND corrupted Americans. If you are the 1% rich AND get rich through honest and hardwork, you are definitely not in that group that I refer to and also not in that group that everyone in Ocuppied Wall Street are refering to. Thanks for allowing me to clarify. Have a nice day. God bless.
PD User at 2011-12-2964.91.200.*
I am one of the 1% richest of Americans. Starting in bottom 10%, through education and hard work and saving money, I am now in top 1%. I have a PhD and 17 patents. Is it a requirement that a good wage requires one to be corrupt?

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