China buy more gold , challenges US dollar
Experts often see gold as protective barriers against economic instability. Meanwhile, many people assert that gold is no better than a stone can not be profitable.
After nearly 20 years at the Federal Reserve (Fed), recently, former Fed Chairman – Alan Greenspan wrote a comment on the role of gold and precious metals with China – largest economy the world’s second. In it, he said, the Chinese simply convert “a fraction of 4.000 billion US dollars of foreign exchange reserves into gold, the strength of the yuan in the international financial system will increase unexpectedly”.
China is believed to have 2000-3000 tons of gold reserves. Photo: The Financial Express
Greensoan also believe that there is little risk of Chinese gold hoard, at least from the perspective of investment. “The Chinese use a portion of foreign exchange reserves to buy gold, to oust the US from the gold throne built many countries in the world, of course, is a card game of chance. However, even in case of miscalculation, Chinese losses incurred very low “.
In recent years, the Bank of China (PBOC) did not announce any change in gold reserves. However, many argue that the agency is buying more gold to diversify reserve assets. In 2009, China announced to hold further 454 tonnes, after 5 years quietly buying gold. To date, the country’s gold reserves were announced at 1054.1 tonnes. However, experts say the real figure could be up to 2000-3000 tons.
Analysts said that China is covertly pushing gold reserves, in order to challenge the dollar – the currency reserves of the world. A few years ago, Xinhua has said: “We need international supervision with the dollar and to a global reserve currency, safe and stable to avoid the risk of a country single cause. ”
Gold plays a very important role in the Chinese economy. China Gold Association said, in 2013, gold consumption in the country increased by 41% to 1176.4 tonnes, surpassing the previous record of 1,000 tons. In particular, demand for gold jewelery increased (up 43% to 716.5 tons) is a key factor in making this record. China is currently the producer and the largest gold consumer in the world.
However, China will face an uphill battle if challenged America’s gold reserves. According to the latest figures from the World Gold Council, US gold reserves, the world’s largest with 8133.5 tonnes of gold. Moreover, as observed by Greenspan, the upcoming US would not sell gold.
He said: “For example, in 1976, as Chairman of the Council of Economic Advisers, I have attended meetings between William Simon – Secretary of the Treasury and Arthur Burns – Chairman of the Federal Reserve that time with a total Gerald Ford system. We discuss Simon’s proposal regarding the US sold 275 million ounces of gold, and invest in the tools to pay interest. Simon said that gold is no longer a viable means of payment as well. in Meanwhile, Burns insists gold is a tool to help repel the crisis. the great minds could not find a common language. Therefore, President Ford decided to do nothing. Until now, the gold reserves of America has not changed significantly. “