The Chinese are investing a lot of money on buying gold. The country is seeing a huge gold shopping binge.
There is no confirmation from the Chinese government as to how much of gold they are accumulating. But, one thing is sure that the gold is heading to China through Hong Kong. The latest data from Hong Kong suggests that China has boosted its gold import by over 700% since 2010.
The central bank of China looks to be buying more gold and selling the other foreign reserves. It is purchasing gold on a monthly basis in spite of total reserves falling every month. There is a report spread in the media that the People’s Bank of China has amassed 580,000 ounces of gold to its reserves last month. The bank now has a total of about 57.18 million ounces of gold. This accounts for an increase of about 0.9% of its gold reserves from December.
There are no details as to what China is exactly doing with this mass accumulation of gold. Even though all the rich people in China are investing in gold, but that will not be a proper explanation for this massive storage of over 57 million ounces of gold. The Chinese government, though, are saying that their gold reserves have just grown by a little in the recent years. This is not true as to many of the analysts.
The total foreign reserves of China are falling every month and it has slipped by $99.5 billion to close at $3.23 trillion last January. This is the lowest foreign reserves that China has seen since May 2012. The decline in January is considered to be one of the worst declines that China has seen in the recent months.
There are many analysts who believe that China is letting go its foreign reserves and buying Yuan in a bid to boost its weakening currency and to help out its brittle stock market. The main reason behind China looking to invest in gold and selling of its foreign currency is to make its currency Yuan a traceable and an international currency.
The central bank is looking to bring its economy to a stable level and it does not mind diversifying its reserves from the American dollars. This could be the reason why it is on a gold purchasing spree.
China is looking to show the world that its currency has strength and this explains why they are investing in the yellow metal. The Hong Kong data shows that China had imported 100 tons of gold in 2010 only and this has now increased to just under 1,000 tons in 2015.
It might be interesting to note that China is one of the world’s largest gold miners and hence it is buying as well as mining a lot of gold every year. There is no doubt that the Chinese government is one of the biggest buyers of gold followed by the rich and wealthy people of china. Click this Link to know ‘What is the Reason Behind the Popularity of Forex?’
After oil, gold is the most traded commodity all over the world. All this effort and investment in gold is just to make their economy stabilize.