China’s growing influence on the market has increased during the past decade. For example, China’s GDP in 1978 accounted for 2% of the global total and most of the Chinese lived below the poverty line. China had a GDP of $305.35 billion, compared to the USA’s $2.86 trillion by 1980. Nevertheless, China’s GDP had grown to $23.15 trillion GDP by 2017, when the USA’s had a GDP of $19.39 trillion. Now China is stockpiling gold, enlarging its reserves. What will happen if China keeps raising them?
China’s position on the gold market has been unclear for a long time. However, gradually and quietly, it has become a dominant player there. After years of secrecy as for its official gold holdings, in 2009, China announced that it had 1,054 tons of gold in the reserves. In 2015, the PBoC (People’s Bank of China) said that they had increased their reserves to 1,658 tonnes. China’s gold reserves as of May 2018, were already at 1.842 tons. Thus, China has become the sixth country with the largest gold reserves. Nevertheless, some analysts believe that China has more gold in its reserves than it lets on.
Since 2008, the PBoC has been stocking up gold at a quick pace. Apart from that, China took South Africa’s position as the world’s leading producer of gold In 2007. For instance, in 2018, China mined 402.1 tonnes of gold. Though about 15 % of all gold produced worldwide comes from China, the country hardly exports any gold mined there.
Analysts say that China aims to diversify its reserves away from the USD.
What has been done so far?
To keep up, China must continue buying more gold to boost its reserves. If the People’s Bank of China ever accumulates enough gold to challenge the status of the US dollar, it will need to announce this large amount to the world. This announcement will change the gold price … and the status of the dollar as a world currency.