China keen to buy IMF gold

China is considering buying gold that the International Monetary Fund (IMF) is planning to sell.  The IMF are planning to sell 403 metric tonnes of gold.

China which currently holds 1054 tons of gold (up from 400 tonnes in 2003) is keen to increase its holding in gold, and if the price is right, China would like to buy from the IMF.

The 403 tons of gold that the IMF is planning to sell is equivalent to 12,896,000 ounces of gold and at a spot price of $US993 per ounce, the gold is worth approximately 12.8 billion in US dollars or around 18.3 billion in kiwi dollars.

China is currently the biggest producer and buyer of gold. and is keen to diversify out of her 2 trillion dollars in foreign currency reserves.  As you can see, China buying up this gold is a drop in the ocean when compared to her 2 trillion in paper currency reserves.

The IMF is reducing its holdings by approx one-eighth of its gold by selling 403 tons to other central banks or if needs be on the open market.  This has been flagged for some time so seems unlikely to have a major impact on the price of gold, especially as it will most likely occur “off market”.  The full Reuters article is here.

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