Gold bubble..China careful with its spending

[GoFlyKiteNow]

China concerned that gold price may be a bubble
Malaysia Sun
Saturday 5th December, 2009

The Chinese government has expressed fears that the revaluation of gold to its historic high could simply be another example of exhuberent speculation.
The Chinese government has expressed fears that the revaluation of gold to its historic high could simply be another example of exhuberent speculation.

Deputy Governor Hu Xiaolian of the Bank of China said on the weekend that China would not continue to buy gold in an indiscriminate manner if the current price should turn out to be the result of driven speculation.

He said such purchases would only lead to the explosion of the bubble.

The government in Beijing has doubled its gold reserves in recent months.

A sudden collapse in the value of the precious metal could create a considerable deficit in domestic accounts.

 

[longbow]

Was wondering why the Chinese did not buy the IMF gold. It was picked up by India instead. The Chinese have a much larger reserve and this IMF gold would be a drop in bucket at most. Another thing I read was that China is the world largest producer of gold. Ahead of South Africa!

Here is Nov 3 Bloomberg article:

"Nov. 3 (Bloomberg) -- India, the world’s biggest gold consumer, bought 200 metric tons from the International Monetary Fund for $6.7 billion as central banks show increased interest in diversifying their holdings to protect against a slumping dollar.

The transaction, equivalent to 8 percent of world annual mine production, was the IMF’s first such sale in nine years and propels India to the ninth-biggest government owner globally, according to figures from London-based research company GFMS Ltd. The country previously held 358 tons, the data show. The news was a “surprise because everybody was talking about China being the buyer,” said James Moore, an analyst at TheBullionDesk.com. "

China concerned that gold price may be a bubble
Malaysia Sun
Saturday 5th December, 2009

The Chinese government has expressed fears that the revaluation of gold to its historic high could simply be another example of exhuberent speculation.
The Chinese government has expressed fears that the revaluation of gold to its historic high could simply be another example of exhuberent speculation.

Deputy Governor Hu Xiaolian of the Bank of China said on the weekend that China would not continue to buy gold in an indiscriminate manner if the current price should turn out to be the result of driven speculation.

He said such purchases would only lead to the explosion of the bubble.

The government in Beijing has doubled its gold reserves in recent months.

A sudden collapse in the value of the precious metal could create a considerable deficit in domestic accounts.