Precious metals investors should note that reports are surfacing that the Chinese government is seriously considering adding to its already formidable gold reserves in an attempt to diversify the country’s foreign currency holdings.
Russia is another major player in the world economy that is looking to add to its gold reserves, with even more gold on hand than China at 1,105 tons. The Russian gold reserves, however, account for nearly 10% of its currency reserves and are far more in line with what China would be comfortable with in terms of a foreign currency to gold ratio. The Chinese government is most likely motivated to add to its gold reserves because although its 1,000 metric ton holdings are impressive, they still pale in comparison to the United States’ 8,100 ton holdings, Germany’s nearly 3,400 tons of gold in reserve and the nearly 2,500 tons of gold currently held by the Italian government.
What does this mean for precious metals investors?
Given that the Chinese historically buy gold on price corrections, now would seem to be the perfect time for the country to take advantage of the recent pullback in gold prices and add to its gold reserves. This move would allow it to catch up with the larger western caches of gold and balance out its foreign currency to gold ratio. This is undoubtedly welcome news for precious metals investors. Following China’s lead and buying while gold prices are low is a smart idea for precious metals investors. Should China and possibly Russia make continual gold purchases, precious metals investors currently holding gold can potentially see a profit from future increases in the price of gold.
Join our newsletter:
Connect with us
Click a link below to add us to your favorite social media channels.