The title here is self-explanatory. China has continued to announce small monthly increases in its gold reserves as part of its new transparency of reporting following on from its big upgrading of its reserve by some 600 tonnes back in June (supposedly six years of accumulated gold purchases). Thus China has been reporting supposed month-by month purchases since and these appear to have settled down to around 14 tonnes a month with an October increase at 14.01 tonnes.
But many Western analysts remain sceptical regarding the true levels of the Chinese monthly purchases – indeed of the the real total level of the country’s gold reserves suggesting that they both may be far larger than is being reported. China doesn’t want to rock the gold price boat is the theory, so it can continue accumulating a massive gold reserve which it sees as vital in cementing its place in the global economic hierarchy. First it wants the Yuan to become part of the IMF’s Special Drawing Right (SDR), which would effectively give it reserve currency status, and a decision on this is anticipated shortly. One suspects that the U.S., which dominates the IMF, will eventually have to capitulate and let the Yuan in, despite the threat this poses for current U.S. Dollar global hegemony.
China’s past record in hiding the real level of its gold reserves suggests it may still be doing so and, at a suitable time, will unveil them – or at least yet another substantial addition – but the first goal is the SDR. once the Yuan becomes part of this the next phase of Chinese economic policy could come about. The Chinese always have played their economic cards very close to the chest and one suspects they may well be continuing to do so until their ultimate aim of having the dominant global currency, with all the trade advantagesthat brings, becomes reality, It is already the world’s largest resource consuming nation and it may be only a matter of time before the petroyuan replaces the petrodollarand the Yuan the Dollar as the world’s pre-eminent rserve currency. Time will tell.
