Thursday, May 21, 2009
At the end of this New York Times report about the rapidly changing views of the Chinese government toward buying more U.S. government debt comes this gem (hat tip MW).
After six years of silence, China unexpectedly disclosed last month that it had been gradually buying gold from domestic producers. The country’s reserves had climbed from 600 tons in 2003 to 1,054 tons, worth $31.8 billion at prices late Wednesday.If they were smart, they'd buy another six or eight thousand tonnes of gold before announcing anything more to the rest of the world and just let everyone speculate if and how much they were adding to their stockpile - this would still leave intact the bulk of their massive $2 trillion in reserves, most of which is still denominated in dollars.
A person in periodic contact with China’s central bank, who insisted on anonymity to preserve his access, said that a Chinese central banker complained to him last year that “we have so much money and there’s so little gold, we can’t buy much without driving up the price.”