May be we should be buying gold.....
Liu Shanen, vice director of the Gold Economic Development and Research Institute of the State Metallurgical Industry Bureau, recommended that the People's Republic should increase its gold reserves from the current level of 397 tonnes or 3% of total foreign exchange reserves of $140.5 billion to between 1,000 and 1,500 tonnes, between 6% and 8% of external reserves, “to prevent financial risk.” The reasoning behind this recommendation is apparently the belief that China should cut its holdings of dollar-denominated foreign reserves to guard against a possible fall in the dollar on the introduction of the Euro, the single European currency, at the beginning of next year. China currently holds about 60% of its external reserves in US dollar-denominated assets, including about $60 billion in US Treasury bonds. “Compared with cash, gold is stable and safe,” Liu Shanen said. He also recommended that the Chinese government should ease controls on buying and selling by individuals in a bid to boost what he described as “non-governmental” reserves. Liu Shanen pointed out that China ranks third in global consumption of gold and fifth in mine production, but only twelfth in terms of its official reserves in gold. |
