In an otherwise quiet article on central banks today, Bloomberg quoted an analyst who says China may use a third of their $3 trillion in foreign reserves to purchase gold. China has been moving away from the dollar, and into alternative stores of wealth for years now.
But $1 trillion in gold? If it happens, such a large move would be a sharp rebuke to the dollar's status as reserve currency, to say the least.
Bloomberg:China’s Gold Reserves
China, which has just 1.6 percent of its reserves in gold, may invest more than $1 trillion in bullion, [Michael Pento of Euro Pacific Capital] said. “China wants to be an international player, and they need to own more gold than they currently have.”
...“China is out to have more gold than America, and Russia is aspiring to the same,” [Robert] McEwen, [the chief executive officer of producer U.S. Gold Corp] said yesterday in an interview in New York. “When you have debt, you don’t have a lot of flexibility. China wants to show its currency has more backing than the U.S.”
...China, with more than $3 trillion in foreign-currency reserves, plans to set up new funds to invest in precious metals, Century Weekly reported this week. Russia purchased 8 tons of gold in the first quarter. (read more)
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