China says gold is 'unlikely' to be primary investment

Gold, which has risen in price for 10 straight years, is 'unlikely' to be a primary investment, Yi Gang, the head of the State Administration of Foreign Exchange, said at a press breifing in Beijing today, Bloomberg reported.

The price has "had handsome gains in recent years,” Yi said. But, “if we look at the past 30 years, it had big ups and downs.” China has lifted its holding of gold by 454 tons to 1,054 since 2003, leaving it with the world's fifth-biggest holding. After India, China is the biggest consumer of gold and, according to Mr Yi, increasing its reserves of gold will "push up prices" and "hurt Chinese gold consumers."

This is an old argument used by both the West and now East. Traders, funds, groups, or nations looking to acquire a position in size without affecting price will never talk it up before or during accumulation. Any suggestion that the Chinese do not understand gold's role during economic depressions would be a foolish assumption. As I wrote yesterday, the Chinese are in control and will reduce their dollar exposure while orchestrating their official policy stance like a master conductor through the media outlets.

Source: telegraph.co.uk