Chinese Banks Low On Gold Reserves. Maybe.
In a world where money flows more freely over borders—both real and virtual—than in any time in human history, it’s easy to forget that gold remains a bedrock of international trade and banking.
Gold has served as currency in one form or another for millennia, and for the past several hundred years, paper money backed by gold has been issued by nations which have seen it as a failsafe against hyperinflation as well as economic and political calamity.
Gold is still viewed as being so critical to global economic stability that the Chinese have come under rather constant scrutiny for the relative paucity of their gold reserves. According to the World Gold Council (WGC)—which is an actual thing and not a James Bond plot device—China currently holds about 1.6 percent of its foreign exchange reserves in gold, far below other similar economies; India is at 6.7 percent, Russia 12.1.
Roland Wang, WGC China managing director, told Reuters he’s recommended that the Chinese shoot for a 5 percent reserve. Of course, all this depends on whether the Chinese are being entirely truthful about what they have in the bank. Many analysts believe Beijing is less than forthcoming with how much gold it actually has; in fact, most assume the Chinese under-report by a considerable margin. That’s because more gold is now being mined in China than anywhere else in the world, which means the Chinese can add to their reserves while making nary a ripple across the international markets. Gold remains the most followed and traded commodity in the world, one that is critical in the worlds of medicine, jewelry and electronics.
For the record, the Chinese say they have 1,054 tons of gold, fifth most in the world, but less than half of the nation in fourth place, France, which has 2,435 tons. The United States is the unquestioned gold standard with more than 8,000 tons of the stuff.
The European Nonwoven Fabric Market Slows Down Near $7.6B