Tag Archives: SAFE

Skepticism reigns about the True state of Chinese central bank gold reserves

One of the most mysterious and unresolved questions in the gold world centers on how much gold reserves the Chinese State, through the Chinese central bank, actually holds. Since October 2016, the People’s Bank of China (PBoC), China’s central bank, has continued to announce unchanged gold reserves each month and persistently claims that its official gold reserves remain static at 1842 tonnes.

That reporting comes through China’s State Administration of Foreign Exchange (SAFE) and is also reported by China to the International Monetary Fund (IMF), as part of the IMF’s International Reserves and Foreign Currency Liquidity (IRFCL) project which collects and disseminates official reserve asset data of the world’s central banks.

This IMF official reserve asset data includes monetary gold holdings, foreign currency reserves, and IMF Special Drawing Rights (SDRs) etc. As can be seen in the below table extracted from the IRFCL database on the IMF website, the figure for China’s monetary gold holdings, which is stated in fine troy ounces, is 59.24 millions, (i.e. 1842.61 metric tonnes). This is also the same gold holdings data that the World Gold Council then extracts from the IMF database and publishes on its own website.

However, as the IMF notes, “Countries participating in this endeavor [IRFCL reporting] do so on a voluntary basis“. The IMF also adds a disclaimer to the data stating “Please note that the re-dissemination of the template data by the Fund (IMF) does not constitute endorsement of the quality of the data by the Fund.”

What China reveals to the IMF – China’s official reserve assets, August 2018

A Leopard doesn’t change its Spots

China has a long track record of being cagey about providing information on the true state of its monetary gold reserves. For example, in April 2009 it announced that its gold holdings had jumped from 600 tonnes to 1054 tonnes, a figure it had not updated since 2003. No one would believe that China had suddenly just bought 454 tonnes in April 2009. The reality was that China was buying on the quiet, under the radar. As Reuters noted at the time on Friday 24th April 2009:

China disclosed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

Again in July 2015, China made a surprise announcement, revealing (or claiming) that its gold reserves had increased from 1054 tonnes to 1658 tonnes. As the Financial Times commented in an aptly titled article “China breaks 6-year silence on gold reserves“, saying that

China ended years of speculation about its official gold holdings by revealing an almost 60 per cent jump in its reserves since 2009.”

So CHina had broken a 6 year silence, and not suddenly bought 604 tonnes of gold. In July 2015, the PBoC confirmed that it would begin following  the IMF’s Special Data Dissemination Standard (SDDS) international reserves reporting template which requires contributing countries to provide updated gold reserve data to the IMF on a regular basis. For a while from July 2015, the PBoC reported monthly increases in its gold reserves each and every month.

However, these monthly updates (of constant monthly gold buying) mysteriously came to a halt in October 2016, after which the PBoC claimed each and every month since then to still hold 1842 tonnes of gold. It has now been a full two years since the Chinese State has claimed to have purchased any gold for its strategic gold reserves. In other words, the Chinese have gone silent again.

Is it naive to believe that a secretive nation which has a long track record of buying gold under the radar only to announce the buying later would suddenly stop this practice? Why would China sign up to providing regular updates to the IMF about its gold buying only to back-track 15 months later and put a lock-down on updates? What to believe?

The Survey Said…

We therefore decided to do a Twitter survey via the BullionStar Twitter account  (@BullionStar) to find out what percentage of people actually believe the official Chinese story? As it turns out, pretty much no one believes the official Chinese line, but the results are surprising in what they do show.

In the Twitter poll we asked “How much gold does the Chinese central bank (PBoC) really hold?” and provided four options….:

  • 1842 tonnes as it claims
  • more than 1842 tonnes but less than 4000 tonnes
  • more than 4000 tonnes
  • less gold than it claims i.e. less than 1942 tonnes[

Although the 4000 tonnes level might seem like an arbitrary number, it took into account that if China, the world’s second biggest economy, wanted to be towards the top of the major league of the world’s central bank gold holders, then it would need to hold more gold than the claimed gold reserves of major central bank gold holders such as Germany (3373 tonnes), Italy (2451 tonnes) and France (2436 tonnes), as well as at least half the amount of gold that the US Treasury ‘claims’ to hold (which is 8133 tonnes).

The Twitter survey ran for 2 days and had a substantial 2337 respondents casting a vote, which is arguably quite a lot as Twitter surveys go. A full 91% of respondents (2127 votes) do not believe the official figure put out by the Chinese central bank, with only 9% of respondents (210 votes) thinking that the PBoC has 1842 tonnes of gold as it claims.

A very large 40% of respondents (935 people) thought the PboC holds more than 4000 tonnes of gold. Another 15% (351 people) think that the Chinese central bank has more than 1842 tonnes of gold but less than 4000 tonnes. This means that 55% (1286 people) of the respondents thought that the PBoC has more gold than it claims to have.

But equally interestingly, a sizable 36% (841 people) of the twitter poll respondents think that the Chinese State (through the PBoC) has less gold than it claims, i.e. less than 1842 tonnes. This is interesting because the major alternative view of Chinese State gold accumulation is that the Chinese are bound to have more gold than they claim to have because they are stealthy accumulating it, so as to at some point in the future reveal another large jump in its reserves at a time of its choosing, for example, a jump from 1982 tonnes to 3000 tonnes or more.

But the survey shows that while nearly everybody is skeptical about China’s official gold holdings numbers, in addition to being skeptical on the upside, a lot of people are also skeptical on the downside and think that the PBoC doesn’t even have the amount of gold that it claims to have. This, if it was true, would arguably be more newsworthy than the scenario in which the PBoC has more gold than it claims to have, and is something that hasn’t really been discussed anywhere on the Blogosphere  or Twittersphere or in the mainstream financial media, as far as I can recall.


Since China is well-known for overstating numbers related to economic data and quantities of all sorts, then it is possible that the Chinese gold has less than 1942 tonnes of gold. Nobody knows. The reason that nobody knows is that neither Chinese, nor any of their central bank contemporaries around the world, ever allows any independent audits of their gold reserves.

Nations’ monetary gold reserves are in nearly all cases treated as state secrets and are often exempt from Freedom of Information Requests. As Chris Powell of GATA is fond of saying, the size and disposition of national gold reserves is a more closely guarded secret than even the existence and location of nations’ nuclear weapons, such is the secrecy that surrounds the topic of monetary gold reserves.

Some reasons why the Chinese State probably hold more than 4000 tonnes of gold. Click to enlarge. Source: BullionStar here


My personal opinion is that the Chinese State has a lot more monetary gold reserves than 1842 tonnes, and even more than 4000 tonnes, that they are constantly accumulating gold. For example its known that the Chinese State buys gold on the London gold market and flies it in their own airplanes to Beijing.

I also think the Chinese have even been receiving large quantities of gold from other central banks behind the scenes in a formal but secret redistribution, for example Banque de Italia sells x tonnes to PBoC (which may sound strange but I heard that this had happened). I also believe China most likely purchased IMF gold in 2010 in the IMF’s secretive ‘on-market’ gold sales, using the Bank of International Settlements (BIS) to price the transfer. Some of the Swiss central bank gold sales in the early 2000s (which look to have actually been executed in the late 1990s and then squared off) are also candidates as surreptitious gold transfers from Western central banks to the Chinese state. Some of these transfers would also point to the probability that China holds some of its gold reserves in the gold vaults of the Federal Reserve Bank of New York (FRBNY) in Manhattan.

So there you have it. A full 91% of survey respondents do not believe the official Chinese position that the Chinese central bank has 1842 tonnes of gold. What to you think? Feel free to leave a comment below with your view.

Neck and Neck: Russian and Chinese Official Gold Reserves

Note: This article has now been updated to reflect the fact that during September 2017, the Bank of Russia added a further 1.1 million ounces of gold (34 tonnes) to its gold reserves. This information was released by the Bank of Russia on Friday 20 October.

Official gold reserve updates from the Russian and Chinese central banks are probably one of the more closely watched metrics in the gold world. After the US, Germany, Italy and France, the sovereign gold holdings of China and Russia are the world’s 5th and 6th largest. And with the gold reserves ‘official figures’ of the US, Germany, Italy and France being essentially static, the only numbers worth watching are those of China and Russia.

The Russian Federation’s central bank, the Bank of Russia, releases data on its official gold holdings in the Bank’s monthly “International Reserves and Foreign Currency Liquidity” report which is published towards the end of the third week of each month, and which confirms gold reserve changes as of the previous month-end.

The Chinese State releases data on its official gold holdings via a monthly “Official Reserve Assets” report published by the State Administration of Foreign Reserves (SAFE) that is uploaded within the Forex Reserves pages of the SAFE website. This gold is classified as held by the Chinese central bank, the People’s Bank of China (PBoC). The SAFE report is published during the 2nd week of each month, reporting on the previous month-end.

In both reports, official gold reserves (i.e. monetary gold) are specified in both US Dollars and fine troy ounces. Monetary gold is gold that is held by a central bank or other monetary authority as a reserve asset on a central bank’s balance sheet.

Delta: 63 Tonnes

For the Bank of Russia, its latest report, published on 19 September 2017 addressing August month-end, shows the Bank holding 57.2 million fine troy ounces of gold (1779 tonnes). For the Chinese State, the latest SAFE release is reporting Chinese official gold reserves of 59.24 million ounces (1842 tonnes).

Russian gold reserves, as officially reported, now total 1779 tonnes, and are now just 63 tonnes shy of the ‘official’ gold reserves of the Chinese central bank. Given that the Bank of Russia is expected to add about another 36 tonnes of gold to its official reserves during the remainder of 2017,  then if the Chinese State does not reveal any increase in its ‘official’ gold reserves between now and the first quarter of 2018, Russia will most likely surpass China in terms of official gold reserves by April 2018.

While its possible and probable that the Chinese State / PBoC really holds more gold than it claims to hold, any upcoming scenario in which the Bank of Russia surpasses the People’s Bank of China in terms of gold holdings would at least be symbolic in terms of international monetary developments, and would be sure to generate some chatter in the financial press.

Although the official gold reserves of these two key nations are now nearly neck and neck, there are still some interesting contrasts between them, not least the way in which the Bank of Russia’s reported gold holdings have been steadily increasing month on month, while the reported gold holdings of the People’s Bank of China have remained totally unchanged for nearly a year now, since the end of October 2016.

Therefore the situation which is now emerging, i.e. the distinct possibility that Russian official gold reserves will surpass those of China something in early 2018, is a situation which is emerging precisely because the Russian Federation keeps adding to its gold reserves, while the Chinese State seemingly does not.

Differing Styles of Communication

The routes via which these two strategically important nations have amassed their official gold reserves are also quite different, at least at a public reporting level.

Bank of Russia
Bank of Russia Gold Reserves: 2006 – September 2017

It wasn’t so long ago (2007) that the gold reserves of the Russian Federation were still in the region of 400 tonnes. However, beginning in about the third quarter of 2007, the Bank of Russia began a concerted campaign to rapidly expand its official gold holdings, a trend which never subsided and which has been ongoing now for exactly 10 years. By early 2011, official Russian gold reserves had exceeded 800 tonnes. By the end of 2014, the Bank of Russia was reporting holding more than 1200 tonnes of gold. And by the end of 2016, Russian official gold were more than 1600 tonnes. For full details on the Bank of Russia’s gold holdings, including gold storage, gold reserve management, gold purchases and Russian government views on gold, see “Bank of Russia, Central Bank Gold Policies” at BullionStar’s Gold University.

From the above chart, it can be seen that during 2014, 2015 and 2016, respectively, the Bank of Russia added 171 tonnes, 208 tonnes, and 199 tonnes to its gold reserves, or in total 578 tonnes over a 3 year period. In 2017, with the Bank of Russia having added another 164 tonnes of gold for the year to end of August, its official gold reserves now stand at 1779 tonnes.

The route to the Chinese State accumulating 1842 tonnes of gold is a different one to that of the Russians, again at least from a publicly reported angle. While the Bank of Russia has historically published changes to its gold reserves on a monthly basis, the Chinese central bank has chosen to remain very secretive, and between 2001 and mid 2015 had only issued four public updates addressing the size and growth of its gold reserves. These 4 updates were as follows:

  • 4th Quarter 2001: From 394 to 500 tonnes: A 106 tonne increase
  • 4th Quarter 2002: From 500 to 600 tonnes: A 100 tonne increase
  • April 2009: From 600 to 1,054 tonnes: A 454 tonne increase
  • July 2015: From 1,054 to 1,658 tonnes: A 604 tonne increase

Beginning in July 2015, however, the Chinese State started to report changes in its official gold reserves on a monthly basis, and by July 2016 was reporting 1823 tonnes of official gold holdings. The following graphic, taken from a BullionStar infographic on the Chinese gold market, illustrates the sporadic reporting of Chinese official gold reserves between the early 2000s and July 2015. Note that between July 2016 and October 2016, the Chinese State through SAFE reported that the PBoC had acquired another 19 tonnes of gold, taking its total reported gold reserves to 1942 tonnes as of the end of October 2016.

Chinese Official Gold
Chinese Official Gold Reserves, 2003 – 2016 Source: Chinese Gold Market Infographic, BullionStar

The sparse official reporting by the Chinese is also clear in the below chart from the GoldChartsRUS website, which shows cumulative holdings of monetary gold by the People’s Bank of China (PBoC) between 2000 and 2017. Looking at the top panel of the chart, it can be seen that between 2001 and 2015, there were only 4 distinct jumps in the quantity of gold held by the PBoC.

This was followed by a period of about 15 months from July 2015 during which SAFE reported small monthly accumulations in PBoC’s gold holdings, as can be seen from the gradual increases in the bars in the top panel from July 2015 to October 2016, and the corresponding presence of frequent activity in the monthly changes in the lower panel of the chart.

Official Gold Reserves of the Chinese central bank: Divulged Holdings 2000 – 2017. Source:www.GoldChartsRUs.com

By September 2016, Chinese State gold reserve holdings had reached 59.11 million ounces. In October 2016, the SAFE report announced that Chinese official gold holdings had reached 59.24 million ounces, a 0.13 million ounce increase from the previous month. However, then something unusual happened, at least in terms of monthly updates. Since October 2016, Chinese official gold reserves have not changed at all. The SAFE updates are still published each month, but the gold holdings figure has remained unchanged at 59.24 million ounces (1842 tonnes).

Therefore, for nearly a year now, the Chinese authorities are signalling that they have not acquired any new gold. At least that is what they want the public to believe. Hence the constantly recurring headlines from the financial media, such as this one from Reuters a week ago, “China gold reserves steady at 59.24 mln ounces at end-September – central bank”.

But is it true that China only holds 1842 tonnes of gold and that it has not been active during the last year in continuing to accumulate monetary gold as part of its reserve assets? And for that matter, is it the case that the Bank of Russia and Russian Federation only hold 1779 tonnes of monetary gold?

While its difficult to know for sure, it is possible that the People’s Republic of China and the Russian Federation both hold additional gold that is not reported by their monetary authorities. This is so for multiple reasons, including the opaque ways in which these monetary gold reserves are accumulated, the traditional secrecy of both governments, and the fact that both countries have access to other investment pools that might hold gold that can be transferred at short notice into the respective central banks’ official gold holdings.

How Much Gold could the Chinese State really have?

The historical track record of the Chinese State in sporadically communicating the size of its monetary gold holdings shows that there has often been a large gulf between the true size of its gold reserves and what the Chinese claimed to have via its piecemeal and rare updates. For example, even based on its official numbers, the PBoC accumulated over 600 tonnes of gold between April 2009 and July 2015 but did not reveal this until July 2015.

The nearly year-long hiatus between October 2016 and the present, during which the Chinese authorities, via SAFE, claim that the PBoC’s gold holdings have remained at 1842 tonnes, could be true, but only in so far as the Chinese State does not wish to inform the world about its sovereign gold reserves. Beyond this, the true gold holdings of the Chinese central bank may be significantly higher than even official published figures suggest.

There is very little transparency into how the Chinese authorities accumulate monetary gold. In July 2015, when SAFE announced the first update to its gold holdings since 2009, it stated that the “major channels of accumulation” of gold were from purchases in foreign markets, domestic gold production, domestic scrap sources, and other transacting in the domestic market. But beyond this, the Chinese authorities never comment on where they source gold from.

There is lots of evidence that the Chinese State purchases significant quantities of gold in the international market, including in the London Gold Market, and then monetises this gold (i.e. classifies it as monetary gold) , before transporting it back to Beijing. See “PBoC Gold Purchases: Secretive Accumulation on the International Market”, at BullionStar Gold University for further details.

The Chinese State is also a possible candidate for having purchased a tranche of the IMF’s gold during IMF gold sales in 2010. See BullionStar blog  “IMF Gold Sales – Where ‘Transparency’ means ‘Secrecy’” for further details.

There are also plenty of other State entities and state controlled entities in addition to the Chinese central bank that could conceivably be holding gold reserves that could in time be reclassified as PBoC gold, and brought into the sphere of reporting. See section “Gold Transfers from other Chinese State entities” in BullionStar Gold University article “Gold Policies of the People’s Bank of China” for further details.

There is also evidence to suggest the Chinese State is really buying about 500 tonnes of gold per year, and that it has a first step target of holding at least 4000 tonnes of gold. This evidence, which is from 3-5 years ago, comes from senior people in the China Gold Association (CGA). See section “How much gold might the PBoC be buying each year?” in article PBoC Gold Purchases.

A gold reserves-to-FX reserves ratio of 5% would currently put Chinese state gold holdings at nearly 4000 tonnes. A gold-to-GDP ratio of about 1.77%, which is the equivalent of the gold-to-GDP ratio of the US, would currently put Chinese state gold holdings at nearly 5000 tonnes of gold.

Russia: Golden Pipelines and Stockpiles

In its “Methodological Notes to International Reserves of the Russian Federation“, the  Bank of Russia defines “monetary gold”  as:

“standard gold bars and coins with a purity of at least 995/1,000 held by the Bank of Russia and the Government of the Russian Federation. It comprises gold in vault, en route and in allocated accounts, including that which is held abroad. The item monetary gold includes unallocated gold accounts with non-residents.”

The primary source of gold flowing to the Bank of Russia comes from Russian gold mining production, with the Russian Federation acquiring a large percentage of domestic gold mining production each year. In practice, a small group of state influenced Russian banks are authorised to intermediate between the gold mining companies and the State, acting as a gold pipeline between the mines and the Bank of Russia / Government. These banks finance the mining companies, purchase their gold output , have it refined into gold bars by Russian gold refineries, and then offer this gold to the Russian State.

Some of these banks include Sberbank, VTB, Gazprombank and Otkritie. For details see section “Russian Banks as bulk buyers of Russian Gold” in the Russian gold market article in BullionStar’s Gold University.

But its possible that some of this gold ends up not with the Bank of Russia, but with other Russian State entities, one of which is the “Gosfund” or “Precious Metals and Gems fund” operated by “The Gokhran”.

This Gosfund could be buying a portion of Russian gold mining output, stockpiling it, and intermittently releasing some of its stockpile to the Bank of Russia. When I asked the Gokhran last year could it reveal its gold holdings, the Gokhran replied to me that “it does not publish information about the amount of gold reserves in the Russian Gosfund nor any data about its precious metal operations.” See letter reply from Gokhran below (for those who can read Russian).

Gokhran reply January 2016 to query on whether it could publish its Gold Holdings.


Given the high degree of opacity with which both the Russian State and Chinese State accumulate monetary gold, and the fact that they both can probably tap additional gold stockpiles for boosting their official gold reserves, it will be interesting to see whether China, through SAFE, announces any increase in the PBoC’s gold holdings between now and the end of Q1 2018.

Because if China does not do so, the Russian Federation will soon have the distinction of being the world’s 5th largest gold holder, pushing China into 6th place. Will China update its gold holdings before the end of 2017, or at least by early 2018? Nothing is certain, but with an ‘official’ difference of only 63 tonnes of gold between them, the race is on.