China Gold Reserves “Too Small” – to Ensure “National Economic and Financial Safety”!

• China Gold Reserves “Too Small” – Ensure “National Economic and Financial Safety”! 
  by Mark O`Byrne, http://www.ibtimes.com/ 
  …. China needs to add to its gold reserves to ensure national economic and financial safety, promote yuan globalization and as a hedge against foreign- reserve risks, Gao Wei, an official from the Department of International Economic Affairs of Ministry of Foreign Affairs, writes in a commentary in the China Securities Journal today which was reported on by Bloomberg.
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  China’s gold reserve is “too small”, Gao said and while gold prices are currently near record highs, China can build its reserves by buying low and selling high amid the short-term volatility, Gao wrote. The People’s Bank of China is accumulating significant volumes of gold under the radar of many less informed market participants which is bullish.
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  The Chinese government is secretive about its gold diversification and buying and does not disclose gold purchases to the IMF. Therefore, there has been no official update to their holdings since the barely reported upon announcement four years ago that Chinese gold reserves had risen from just over 500 tonnes to over 1,000 tonnes.
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  In 2009, State Council advisor, Ji said that a team of experts from Shanghai and Beijing had set up a task force to consider expanding China’s gold reserves. Ji was quoted as saying “we suggested that China’s gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years”.
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  China is likely to have been quietly accumulating another 1,000 or 2,000 tonnes in recent years and astute market participants realise that the announcement by China of a dramatic increase in gold reserves could lead to sharp price gains.
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  The very low level of the People’s Bank of China’s gold reserves vis-à-vis their massive foreign exchange exposure and compared to western counterparts gold reserves will continue to be a source of significant gold demand in the coming months which will support gold and may contribute to higher prices in 2013.

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