Chinese central bank now reporting buying gold on monthly basis

08-Sep (LawrieOnGold) — China is doing its best to please the IMF ahead of what it hopes will be the acceptance of the Yuan as a currency that is one that makes up the Special Drawing Right of the IMF. As part of this acceptance it is now reporting its official purchases of gold. After the 600 tonne addition of gold to its reserves in June it is now reporting its monthly purchases. In July it bought 19 tonnes during the month and in August 16 and reported the purchases to the IMF. The statement that it does not expect a longer term devaluation of the Yuan appears to be part of this program of cooperation, despite the reality that the Yuan went 8% higher with the dollar, when there were few reasons for it to keep the ‘peg’ alignment. This cooperation is likely to continue until at least September 2016 when it is hoped it will be accepted by the IMF in this role.

Of importance to gold investors is that the PBoC is now continuously buying gold for the reserves and at this rate will acquire 210 tonnes over the next year. But the opaque nature of China’s gold policy does not tell us that this was from local sources or from overseas. When it raised gold reserves initially it stated that the gold came from overseas as well as from local sources. We are of the opinion that the tonnage bought now on a monthly basis was from overseas not from the 430 tonnes produced annually inside China. As we said yesterday, “Demand as reported by the Shanghai Gold Exchange is far ahead of the record 2013 demand levels to date. As we reported last week, add this to Indian demand and there is nothing left for the rest of the world, and yet London and New York are taking prices lower and currently holding them there.”-

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