China Tells

China’s Gold Reserve increased in 2008 from the previous level of 600 tons to the current level of 1054 tons. In recent years China government has been trying hard to diversify the foreign reserve from USD to other assets. Gold is one of the important assets to diversify into. However, given the size of China’s foreign reserve, any agressive move in the world gold market would cause huge movement in the price. The main reason is that other main holders of gold (eg., ECB, USA, etc) are hoarding the gold reserve and have no intention to sell. China is now world’s 8th biggest organization to hold the gold, and about 10% of the world’s largest holder of gold ECB. However, with China’s mere holding of 1054 tons, it already accounts for 70% of the open interest in Comex Gold Future. One can imagine how small portion of the world’s gold reserve has been traded on open market.

Given China’s current situation, its gold reserve is still small, and the weight of gold reserve in its total reserve is ignorable as well (less than 1%). Compared to other countries, it is obvious that the traditional industrialized countries (USA, Germany, France, etc) hold most of their reserve in gold. The only advanced economy that does not hold gold in significant volume as its reserve is Japan. Japan is a loyal friend and believer in USD and holds most of its reserve in USD.

中国2008年底黄金储备量达到1054吨。虽然比上一年度有显著增加，但是跟国际同行相比还是小巫见大巫。中国目前黄金储备占世界第8，储备量是世界第一的欧洲央行所持有的黄金的10%。同时中国黄金储备在所有储备中不到1%，因此还有很大空间增长黄金的储备。