China buys 14 tonnes of gold in October

China's central bank added about 14 tonnes of gold to its reserves in October added, according to the latest Figures of the Chinese State Administration of Foreign Exchange. The value of China's gold reserves rose from $61.2 billion in September to $63.6 billion in October. Adjusted for the development of the gold price during this period, this is an increase of an estimated 14 tonnes of gold.

China's official gold reserve currently stands at 1,722.5 metric tons, or about 55.38 million troy ounces. In recent months, the country has bought 15 to 20 tonnes of gold every month to diversify its reserves, and since 2009 the total gold reserve has increased by 57%.

From foreign exchange reserves to gold

China has very little gold on its balance sheet in relation to its foreign exchange reserves. Of the total $3.5 trillion reserves, less than 2% is made up of precious metals. And while the Chinese Buy gold on the contrary, they are disposing of currency reserves. In 2014, China's foreign exchange reserve peaked at around $4 trillion, but since then, the central bank has consumed $500 billion.

According to Mark O'Byrne of Goldcore, China's central bank does not limit itself to buying gold. Through the China Investment Corporation (CIC), China invests in dozens of gold mines from South America to Africa. In doing so, they secure the future supply of physical gold.

Despite the relatively weak development of the Gold price In recent years, central banks have continued to buy gold. Especially Russia and China are very active in this market, they buy at least 10 tons of gold almost every month. The question is where all that gold comes from, because there have been no central banks that sell stocks of gold on a large scale for years. So the gold comes from the gold mines or from the secondary market.

China adds 14 tonnes of gold to reserves (Source: Sharelynx)

While the foreign exchange reserve is shrinking (Source: Sharelynx)