China says it is now the world’s fifth largest holder of gold. Hu Xiaolian, head of the State Administration of Foreign Exchange, told Xinhua that China’s gold reserves stood at 1,054 tonnes at the end of 2008. That is up by 454 tonnes from the last time the country made the size of its gold holdings public five years ago. China, which is the world’s largest gold producer, is now owns more gold than Switzerland and is one of only six countries to hold more than 1,000 tonnes of the metal.
Hu’s announcement is further evidence of Beijing’s diversification of its foreign exchange reserves away from dollar-denominated assets, though to keep things in perspective, the gold holdings are worth $31 billion at current prices, versus foreign exchange reserves of nearly $2 trillion, and the U.S., the world’s largest holder of gold has 8,134 tonnes, according to the World Gold Council.
The question for investors is whether Beijing plans to buy more and, if so, how much. Intriguingly, the IMF has a 400-tonne holding it has indicated it wants to sell.