China should increase its gold and silver reserves, the Economic Information Daily reported today, citing an interview with central bank adviser Xia Bin.
Increasing gold reserves at the “appropriate time” is in line with the strategy of internationalizing the yuan, the report cited Xia as saying. “Related departments” should employ a “buy in the dip” strategy over a very long period of time, Xia said.
Bullion soared nearly 30 percent in 2010, advancing for the 10th year, as the dollar dropped and investors sought a store of value amid currency debasement. China is allowing greater use of its currency for cross-border transactions, seeking to reduce reliance on the dollar.
The report is “a positive factor for gold prices in the mid-and-long term,” Hwang Il Doo, a senior trader at Seoul- based Korea Exchange Bank Futures Co., said today. Still “it didn’t have immediate impact on prices as gold’s gain has more to do with the unrest in Egypt at the moment.”
Total gold consumption in China, the second-largest buyer, may gain 15 percent in the first half, fueled by growing demand for alternative investments and a hedge against inflation, the China Gold Association said last week.
Imports of gold by China jumped almost fivefold in the first 10 months of last year from the entire amount shipped in 2009, the Shanghai Gold Exchange has said. Shipments were 209 metric tons compared with 45 tons for all of 2009, said exchange Chairman Shen Xiangrong.
The country increased gold reserves by 454 tons to 1,054 tons since 2003, the State Administration of Foreign Exchange said in April 2009. The metal only accounts for 1.6 percent of the nation’s reserves held by the People’s Bank of China, according to the World Gold Council. China doesn’t regularly publish gold-trade figures and rarely comments on its reserves.
Immediate-delivery bullion gained as much as 0.7 percent to $1,346.27 an ounce, and was at $1,339.25 at 12:53 p.m. in Seoul. The price rose 2.5 percent on Jan. 28, the biggest intraday increase since Nov. 4 as escalating tensions in Egypt fanned concern that unrest may spread to other parts of the Middle East, increasing demand for an investment haven.
Xia’s remarks echo comments he made last month in an opinion piece for the China Business News.
CEO Blog - Feb 1, 2011 Tuesday, February 01 2011 17:15
Question: Are you still on target for production in 2011? Can you give a starting month for commencing production? Answer: Our strategic plan clearly calls for a return to mine production in 2011, and validation of mineral resources and reserves of at least 3.25 million gold equivalent ounces by 2013. Planning and scheduling each intermediate objective ensures our qualified team is able to execute timely and effectively. We are fully scheduled with a critical chain of tasks supporting the intermediate tasks necessary for commencing production. Yes, we are on track for commencing production in 2011.
Some of the more critical intermediate objectives scheduled for production include: completing development drilling in our Lucerne Resource Area (completed and recently announced); completing initial (bottle roll) metallurgical testing on all relevant material types in all of the starter mine resource areas (completed); completing full heap leach, column simulation metallurgical testing (in progress); finalizing our starter mine and production plans for the Lucerne Resource Area (in progress), including assessing sufficiency of reserve from the Hartford segment of the Lucerne Resource Area, completing Infill drilling in the Dayton (in progress) and East Side Resource Areas (scheduled), finalizing our starter mine and production plans for the Dayton and East Side Resource Areas (scheduled); finalizing metallurgical process and equipment design (primarily crushing plant and metallurgical process stages) (scheduled); finalizing submitted amendments to existing permits (in progress), as required, purchasing and installing new equipment (scheduled), staffing and commencing production (scheduled).
All of the aforementioned activities are either in progress or scheduled for commencement for production in 2011. Again, we do not know exactly what month production will start because the results of certain tasks are unknown (for example, metallurgical testing results will define final material crush sizes and final crushing equipment design) and we must adapt our activities properly before we commit the next necessary capital expenditures for production. Ultimately, this approach saves tremendous time and money and avoids deploying capital poorly or sub-optimally.
Please recall that our starter mine plan in the Lucerne Resource Area is positioned on private land under our existing permits. So far, we are pleased with the progress of our schedules, both in terms of drilling and all other activities progressing us toward production.
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