As we are approaching the moment the PBOC unveils they have more physical gold in reserve than what has been disclosed since 2009, 1054 tonnes, we will again analyze everything there is to find about PBOC gold purchases. Grasping the exact size of their current official gold reserves is unfortunately impossible, but if we understand why, ‘not-knowing’ actually forms a piece of the puzzle. The purpose of this post is to get an overview of all data and clues in order to separate the facts from speculation. From there we’ll estimate how much above ground gold is held in China mainland – official (PBOC) and private reserves.
I have been writing for a long time the PBOC does not buy any gold trough the Shanghai Gold Exchange (SGE), therefor PBOC purchases must be seen in addition to the flows of gold going through the famous bourse in Shanghai. However, I deem it necessary to contemplate this assumption one more time. I’ll tell you what I know and what I think.
We have a fairly good view on how much gold is going through the SGE and is net imported into China, after which it’s not allowed to be exported and thus is accumulated in the mainland (read this post for an analysis on Chinese gold trade rules). By adding domestic mine supply we can estimate how much gold is held in reserves by the Chinese. But, are any of these visible gold flows bought by the PBOC? If not, how much does the PBOC buy abroad in addition to the visible flows we see entering China mainland through the SGE? These questions are the springboard for our investigation.
This post was published at Bullion Star on 20 May 2015.
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