04/24/2009, 00.00
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China increases its gold reserves

Experts maintain that Beijing wants to increase its gold reserves to 5,000 tons, to protect itself from the global crisis and the possible devaluation of the dollar. It now has about 31 billion dollars worth of gold, but foreign currency reserves of 1.95 trillion.

Beijing (AsiaNews/Agencies) - Since 2003, China has increased its gold reserves by 76%, from 600 tons to the current total of 1,054 (the fifth largest stockpile in the world), according to information released today by Hu Xiaolian, head of the State Administration of Foreign Exchange.

The news immediately cause the gold price to rise by about 1.1%. Gold was quoted at 911 dollars per ounce in Singapore today, compared to 337 dollars in 2003.

For years there have been rumors that Beijing has been steadily buying gold, with the intention of protecting itself from possible collapses in foreign currencies, especially the U.S. dollar. Experts observe that this announcement leads to the conclusion that China intends to buy more gold, proof of increasing lack of confidence in the U.S. currency, and also confirmation of its role as a global superpower.

Hou Huimin, deputy secretary general of the China Gold Association, says that China may want to hold a total of 5,000 tons of gold.

China has the largest foreign currency reserves in the world, estimated at 1.95 trillion dollars as of March 31. Its gold reserves are estimated to total 30.9 billion dollars.

If the currencies it holds were to be devalued, gold could maintain its value. The European Central Bank has recommended central banks of its member states to have at least 15% of their reserves in gold, but Asian countries hold a smaller percentage.

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