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China’s central bank may have secretly bought 300 tonnes of gold this year

by Frik Els | November 9, 2013 | Reprinted by permission of MINING.com

Central banks bought close to 535 tonnes of gold in 2012, the most since 1964.

Gold purchases by central banks have slowed this year although the institutions remain net buyers of the metal in 2013.

The world’s central banks changed from being net sellers of the metal in 2009 after two decades of decreasing holdings.

China’s central bank may have secretly bought 300 tonnes of gold this year

$3.6 trillion of reserves, only 1% in gold.
(Image: People’s Bank of China logo)

Markets keep a close watch on gold movements by central banks, none more so than the People’s Bank of China.

China’s gold reserves are officially put at 1,054 tonnes—a number officials haven’t updated since 2009.

Rumours about massive purchases—up to 6,000 tonnes according to some estimates—continue to circulate as the country seeks to diversify its massive foreign exchange reserves, which are mostly held in U.S. dollars.

Gold makes up little more than 1% of the country’s $3.6 trillion in reserves, compared to more than 70% for the United States, which holds 8,166 tonnes of gold in vaults.

Philip Klapwijk of Precious Metals Insights told Businessweek China may have bought 300 tonnes of gold in the first half of this year:

“The probability is that there’s some form of official purchases that have not yet been reflected in the monetary gold reserves,” Klapwijk said, referring to bullion declared to the International Monetary Fund. “Undoubtedly, that’s provided support for prices, which could have been weaker.”

Chinese consumer purchases of gold this year are forecast to jump 29% to reach 1,000 tonnes, overtaking India to become the world’s largest user, according to the World Gold Council.

The gold spot price dipped below the $1,300-an-ounce level for the first time in three weeks on November 8, falling as much as $25 an ounce to a session low of $1,281.

The precious metal is down more than 23% in 2013, dropping to a near three-year low of $1,220 at the end of June, and is set to break its unbroken 12-year bull run this year.

Reprinted by permission of MINING.com

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