CAPE TOWN (miningweekly.com) – Emerging central banks were for the first time in modern history buying gold, Hale Global Economics founder David Hale said on Tuesday.
Hale told the Investing in Africa Mining Indaba that last year the emerging market central banks of Russia, Korea, Kazakhstan and elsewhere bought 450 t of gold, the largest gold purchase in many years by monetary authorities.
“The big wild card will be China,” Hale said.
The Chinese monetary authorities last announced a big increase in gold reserves in 2009, but have reported nothing since.
China was, however, debating the purchase of more gold and a recent article in its central bank newspaper advocated a large increase in gold purchases because of uncertainty about the dollar and the global financial markets.
China currently had 1 050 t of gold in its reserves, compared with 8 000 t of the US, 3 400 t in Germany and 2 500 t in France and Italy.
“China is very much underweight in gold,” he said.
China at the same time had $3.2-trillion in foreign exchange reserves.
If China wanted to have a meaningful gold presence in central bank reserves, it would have to buy several thousand tons of gold.
“We just don’t know how and when this will happen,” Hale adds.
It was quite possible that what China was secretly doing right now was buying up all of the 400 t/y of the gold produced in China, as Kazakhstan was doing.
China did not report what it was doing in gold for fear of the price spiking, but was likely to reveal its purchases 12 to 18 months after they had been made.