Contrary to much speculation, China may not be the buyer of the remaining 191.3 tons of gold that is up for sale from the International Monetary Fund (IMF).
Speaking on the condition of anonymity, a senior official from the China Gold Association was quoted in Reuters saying, “It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility.”
The unnamed official said China would continue to build its gold reserves by acquiring gold mines abroad rather than purchases on the international market.
Some analysts speculated that China would purchase the IMF gold in an effort to diversify its dollar asset-dominated foreign exchange reserves. According to estimates, China hold’s over 70% of the country’s $2.4 trillion foreign exchange reserves in US dollar assets. China holds approximately 1,054 tons of gold reserves. This gold is equal to only 1.2% of the nation’s gross domestic product, far below the world average of 10%.
Good Investing,
Luke Burgess
Editor, Wealth Daily
Investment Director, Hard Money Millionaire
