Friday, July 17, 2015

China Updates Gold Reserves, First Time in 6 Years

I won't leave you hanging:
"China increased its gold reserves by 57 percent as it disclosed official holdings for the first time in six years.

The country boosted bullion assets to 53.31 million fine troy ounces (1,658 metric tons), the People’s Bank of China said in a statement Friday. That’s an increase from 33.89 million fine troy ounces (1,054 tons) in 2009, when it last updated the figures." - Bloomberg
An additional 604 tonnes accrued over 6 years, call it 100t/pa, which was added to official reserves. Of course this was in addition to substantial demand from elsewhere in China with local "consumers" of the metal (those investing, saving in and wearing Gold) increasing their buying substantially in recent years. 

Here's how the number compares with Russia's increase over the same period:

April 2009 to July 2015 (Official Gold Reserves)

China: 1054 to 1658 (+604 tonnes)
Russia: 532 to 1250 (+718 tonnes)

This update will disappoint many who were expecting that the update on Chinese reserves may be a catalyst to reignite some interest in the metal, I suspect this number won't be enough to do anything of the sort as it comes in lower than even some of the most conservative estimates. Of course China could be holding back (and it is likely they own Gold in other state controlled institutions), only announcing what they want the world to believe they have... I'm sure this will be the narrative that will be driven hard by those who were hoping for a more substantial number.

Here's a few earlier guesses, estimates and commentary from around the internet (can you find a closer estimate than Bron's? Post it in the comments if you do):

"Assets were probably about 2,710 metric tons, compared with the last reported holdings of 1,054 tons in April 2009, according to the report." - Kenneth W Hoffman,  Bloomberg Industries (January 2014).

"The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons..." Bloomberg Intelligence (April 2015).

"With last reported gold reserves of 1054.1 tonnes, we therefore suggest that a reasonable estimation of China’s current gold reserves would be 1,560 tonnes." - Bron Suchecki, Perth Mint (September 2012).

"My estimate of 4,500 tonnes of current gold reserves might be high, but it may also be much less than whatever may ultimately satisfy China’s ambitions." - Jeff Clark, Casey Research (July 2014).

"The Chinese state has probably accumulated between 20,000 and 30,000 tonnes since 1983..." - Alasdair Macleod (Late 2014).

Settle down Baron!

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1 comment:

  1. I was planning on updating that analysis, will do now. To be fair, based on my methodology I probably would have estimated China's gold reserves circa 2000t by now.

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