Official Gold Holdings as of April 2009

Here is an interesting chart from the World Gold Council showing the current tonnage of the 20 largest holders of gold. Despite China being the 7th largest holder, gold only represents a mere 1.6% of the country’s $2 billion of foreign reserves – and this is after increasing their holdings from 600 metric tonnes at the end of 2008. As discussed in prior posts, Chinese officials have hinted at their plans to increase their gold holdings to as much as 4,000 tonnes, which could have significant implications on the supply/demand forces underlying the yellow metal. While recent IMF sales have kept a lid on the price of gold, once this artificial selling pressure abates, we could easily see gold surpass $1,000/ton, particularly as concerns over the US’s ability to fund its mounting deficits become a self-fulfilling prophecy.