"Official Chinese paper calls for more gold reserves" – So While the Chinese Want to buy Gold at a Lower Price, they want More Gold

I  suspect that the Chinese would like to diversity a lot more of their reserves into the oldest and most trustworthy money in the world.  Money un-encumbered by counter parties,  un-repayable debt and a financial system that is ok with allowing hundreds of trillions of OTC financial derivatives to exist without virtually no meaningful regulation.    I suspect they probably wish they had bought the IMF gold at or below the price that India paid.

I think they are wasting time.   Gold in its rightful place as the true world reserve currency would be far above $5,000.   Even returning to its inflation adjusted high it would be at over $2,300.

Last year one the brightest economic minds of recent history,   Robert Mundell, a consultant to the Chinese government, was said to be advocating that the China buy "all the IMF Gold" .  Last month, after the Indian Gold purchase of 200 tons of IMF gold, Mundell was talking down gold and talking the dollar up.

In my opinion this is MOPE being put out by the Chinese equivalent of the US Exchange Stabalization PR machine to try to talk gold down so that they can negotiate a better price with the IMF.    Now today a major Chinese publication states what appears to be a national sentiment in China.   And that is that China needs to diversity its foreign "money" holdings into gold.   Personally, I believe they may get the IMF gold around the same price as India but that will only later quickly drive gold up to $1,650.

Here is an excerpt to the article and a link:

Official Chinese paper calls for more gold reserves

"…BEIJING, Dec 8 (Reuters) – China should increase the proportion of gold in its foreign exchange reserves to ensure the safety of its overall portfolio, an official Chinese newspaper said on Tuesday.

The commentary, which was written by an academic and appeared in the overseas edition of the People’s Daily, also said that a bigger holding of gold was a crucial building block for the yuan to become an international currency.

Gold XAU= has soared to record highs over the past month, in part on expectations that China will step up gold purchases to boost its official reserves of the precious metal.

"Although the return on gold may not be high, its safety is widely acknowledged. We should put safety first in managing our foreign exchange reserves and do our utmost to ensure that we can maintain the value of our current assets," Jing Naiquan, an assistant professor of economics at Zhejiang University, wrote.

He added that the dollar’s credibility has been supported over the decades by sizeable U.S. gold reserves, and that gold is an important backstop for all free-floating currencies. …"

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