China Should Raise Gold,
Oil Holdings, Official Says (Update1)
June 18, 2010, 12:24 AM EDT
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Gold accounts for 1.6 percent of the reserves held by the People’s Bank of China, according to the World Gold Council.
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June 18 (Bloomberg) -- China, owner of the world’s largest foreign currency reserves, should increase its holdings of precious metals and oil as part of a diversification strategy,
a member of the National People’s Congress said.
The government should also cut overseas debt holdings and increase equity investments, Yin Zhongqing, vice chairman of the finance committee of the congress, said in Shanghai today at a conference.
Foreign reserves, at $2.45 trillion as of end March, may reach $2.8 trillion by the end of the year and the country can’t afford to let the level rise higher, he said.
Gold has gained 13 percent this year as investors seek to safeguard their wealth after the European sovereign debt crisis roiled equity and currency markets worldwide.
India and Russia added to gold reserves last year as the metal capped its longest winning streak since at least 1948.
“China should adjust the asset structure of its foreign reserves and achieve the goals of making the investment safe, liquid, and preserving and adding value,” Yin said.
The bullion hit an all-time high of $1,252.11 an ounce on June 8 and traded at $1,244.35 at 12:15 p.m. Beijing time.
The precious metal is on course for its 10th year of gain.
Gold accounts for 1.6 percent of the reserves held by the People’s Bank of China, according to the World Gold Council.
The country increased its reserves by 454 tons to 1,054 tons since 2003, the State Administration of Foreign Exchange said last April.
Still, the relative high volatility and costs of holding and trading gold limit the precious metal’s use for asset allocation, the foreign exchange administration said in its annual report on foreign currency management on June 10.
--Luo Jun, with assistance from Xiao Yu in Beijing. Editors: Tan Hwee Ann, Ang Bee Lin
To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net
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