Gotta love the market spin by the Traditional Financial Media and perma gold haters...
Here is close to source news on China & Gold...
China will consider investing more of its foreign exchange reserves in gold "cautiously" based on market conditions
China will consider investing more of its foreign exchange reserves in gold "cautiously" based on market conditions, Yi Gang, vice governor of the People’s Bank of China (PBC) and head of the State Administration of Foreign Exchange (SAFE) told at a conference when interviewed on foreign exchange management and foreign exchange reserves.
China's gold reserve amounts to 1,054 tons, ranking fifth in the world. China has purchased more than 400 tons of gold in the past few years at reasonable prices.
China is the largest gold producer in the world, with more than 300 tons of gold produced annually. China is also the second largest gold consumer in the world, with a consumption of over 400 tons of gold a year, second only to India.
It is conservatively estimated that there are far more than 3,000 tons of gold accumulated among Chinese people.
"Gold is not a bad asset, but currently a few factors limit our ability to increase foreign-exchange investment in gold," said Yi Gang.
english.caijing.com.cn
Here is Reuter's first take.... from more "local" source...
China will be prudent in buying gold: official
3:08am EST
By Zhou Xin and Simon Rabinovitch
BEIJING (Reuters) - China will be prudent in adding gold to its official reserves, wary that any move to buy the precious metal would only serve to drive its price higher, the country's top foreign exchange manager said on Tuesday.
Yi Gang, head of the State Administration of Foreign Exchange, said that while gold was "not a bad asset," it would never become a big part of China's overall investment portfolio.
"The international gold market is very limited. If I purchase gold on a massive scale, it will definitely push up global gold prices," Yi said at a news conference on the sidelines of China's annual parliament.
"So, as for suggestions from many friends that we should increase gold holdings, we will give prudent consideration to this, according to market conditions."
Gold fell $3 in the hour after Yi spoke, later paring losses to reach $1,122 per ounce, as many market participants had already discounted the chances of a sudden gold spree by China.
Many investors have wondered whether China might buy 191.3 tonnes of gold being offered for sale by the International Monetary Fund, after India bought 200 tonnes in November.
"We have been saying that whilst it's clearly the case that it's sensible for China to buy some gold, we think it's more likely they'll be doing it quietly in the open market as opposed to taking a large chunk of the IMF gold," David Barclay, commodities analyst at Standard Chartered.
State media have reported the country is unlikely to do so, partly for fear of fuelling market speculation, and Barclay said he thought it was largely a question of price.
"If we have gold correct down below $1,000 then I think it's more likely, given that they've said prices below $1,000 are more reasonable and also it would be lower than the $1,045 level that India bought at. There is that rivalry between the two countries."
"CHINA WON'T IGNITE THE MARKET"
The Chinese government wowed the gold market last year by revealing it had increased its holdings of the metal to 1,054 tonnes from 600 tonnes in 2003. Buying the IMF gold might cause prices to spike, Barclay said.
"Prices haven't really corrected that much despite the drop in the euro, and we've seen investor positioning turn a bit more positive. It wouldn't take much, if China did come out, to really ignite the market, and I don't think that's something they want to do."
China's $2.4 trillion in foreign currency reserves and its relatively small gold holdings have fueled speculation the country is continuing to buy, although officials have insisted that any increases have come from domestically produced gold and the international price is too high.
"It is, in fact, impossible for gold to become a major investment channel for China's foreign exchange reserves. We have 1,000 tonnes now, and even if I double that holding, according to current prices, that would be about $30 billion," Yi said. "It would just increase the level of gold (in China's reserves) to about 2 percent from the current 1 percent."
Yi also said that, from a long-term investment perspective, gold was not the best play.
"Gold prices in recent years have risen very nicely, but if we look at the price over the last 30 years, gold prices moved in great swings," he said. "So as an investment, its yield is not very good from a 30-year point of view."
China is vying with India to be the world's top consumer of gold. It is already the top producer, with output of 313.98 tonnes last year, up by almost 50 percent in five years.
In January, China produced 21.81 tonnes, a rise of 8.1 percent from a year earlier, according to the Ministry of Industry and Information.
(Additional reporting by Langi Chiang and Tom Miles)
(Editing by Clarence Fernandez)
reuters.com
OK so China is going to be "prudent" and doesn't wanna tip its hand about its buying and trigger the sharks in COMEX to swing the price against them. Sounds reasonable.
Both of the above articles in the wee hours...
Now the "press" gets a hold of the story and we see these headlines.....
China's forex chief not too keen on gold as investment
Regulator also urges Chinese purchase of Treasurys not be politicized
marketwatch.com
China says committed to U.S. debt, wary on gold
Langi Chiang and Alan Wheatley
BEIJING
Tue Mar 9, 2010 6:51am EST
BEIJING (Reuters) - China, the world's biggest holder of foreign exchange reserves, renewed its commitment to the U.S. Treasury market on Tuesday but said it would be wary of substantially boosting its gold holdings
reuters.com
No wonder we took another dip in POG. Perfect timing too as the Treasury unloads another $100B+ of paper this week.
Geez.
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