The managing director for the Official Monetary and Financial Institutions Forum in London, David Marsh, said in an interview on September 11, “It is clear that western central banks over time will be reducing their reserves and China and other Asian countries will be increasing.”
“Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves,” Marsh added.
China has not made any official reports about its gold reserves since 2009 and recently made changes to the ways in which gold is imported into the country in order to obscure activity in the market as part of efforts to exert greater control over global pricing.
Central Banks around the world have increased gold purchases for the past 14 consecutive quarters and are expected to increase purchases for 2014 by as much as 25% over last year, according to the Official Monetary and Financial Institutions Forum.
“I don’t know if China has been boosting their official gold reserves,” said Marsh,“But I’d rather think over the past six or seven years the Chinese authorities probably have been adding to their holdings in different ways.”
A Wikileaks cable from 2009 disclosed that the country has indeed been upping gold reserves as part of an ongoing plan to increase the renminbi’s use as an international currency.
The foreign exchange reserves of China are the largest in the world and have almost doubled since 2009 to nearly 4 trillion dollars. It is believed that roughly 1/3 of those reserves are in U.S. dollars. The World Gold Council estimates that the country currently holds around $7 billion worth of bullion, but those numbers are likely flawed and underestimated.
China is not the only country that has been boosting its gold reserves. Russia recently increased holdings to the highest levels in two decades.