widely respected economist in China, Li Yining of Peking University, has joined a chorus of advisers urging the Chinese government to increase the country’s gold reserves as a hedge against inflation of foreign currencies.
“China should increase its gold reserves appropriately, and China must take every chance to buy, especially when gold prices fall,” Li told China’s Xinhua news agency.
At least one government official argues that building up China’s gold reserves would drive gold prices too high for everyday consumers.
“The gold price shot up last year, and surging gold prices have forced Chinese people to pay more as there is strong demand for gold for those getting married and other events,” Yi Gang, head of the State Administration of Foreign Exchange,said recently.
China’s appetite for gold is large. Households and businesses purchased more than 300 tons of the metal last year, and that trend looks to continue in 2011. If the government jumps in, everyday gold buyers may find themselves unable to afford gold.
Still, China’s official gold holdings are much smaller than many other countries – amounting to just 1.7 percent of its foreign reserves, according toCNBC. With a population of 1.34 billion, that equates to about $37.45 worth of gold per person for a total of $50.19 billion. The U.S. holds nearly five times as much bullion.
Here’s a break-down of the Top 10 largest gold reserves in the world :
After falling rapidly in January, gold prices have spiked in the past six weeks in the face of turmoil in the Middle East and Northern Africa. All told, the metal’s up 3 percent since the start of the year. If the Chinese government starts buying in earnest again this year, expect prices to climb even higher. – Source: http://tradingstocks.me/china-gold-reserves-too-small-adviser-says/
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