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Updated 09:06 16/05/21

The secrets behind the Chinese gold market

By Duncan Richardson, News Editor

14 Mar 2017

There is no doubt that China wants to control the International Monetary System, which is why the emerging superpower has been purchasing huge amounts of bullion via government and private channels.

The Chinese gold market is opaque by design as the Chinese want to hide the true extent of their stockpile. The best estimate comes from Koos Janssen who has studied the Chinese gold market for over a decade. He estimates that the Chinese own a staggering 19,500 metric tonnes of the yellow metal.

At first glance this seems unrealistic, but when you consider the Chinese government has prompted private ownership since 2002, it's conceivable that the Chinese population now owns 15,500 tonnes of the yellow metal. Most of this gold has been imported via the Shanghai Gold Exchange. The exchange sells gold directly to consumers, business and the Jewellery industry and not to government sources.

According to Janssen the remaining 4,000 tonness has been bought directly by the Peoples Bank of China (PBOC). The PBOC uses its private banks to purchase gold from LBMA members in London and then ships the gold to China. Since 2011 1,000 tonnes of gold have been drained from the LBMA.

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