China "Aims To Have More Gold Than America"

THE CENTRAL BANKS of developing countries will Buy Gold at an increasing rate in coming years, with China being a leading player, according to a major industry figure.

Rob McEwen, founder and former head of Goldcorp, now the world's fifth largest Gold Mining company, believes central bank purchases could help push the price of gold to $2000 an ounce by the end of the year.

"China is out to have more gold than America, and Russia is aspiring to the same,"said McEwen, who is now chairman and CEO of junior miner US Gold. "When you have debt, you don't have a lot of flexibility. China wants to show its currency has more backing than the US."

According to figures from the World Gold Council (WGC), China's gold reserves were worth $48.2 billion in March 2011. This compares to $372.2 billion for the US. Russia's gold reserves were estimated to be worth $36.1 billion.

Central banks became net buyers of gold in 2010. The WGC reports that, over the past decade, European central banks alone have accounted for approximately 10% of the world's annual gold supply, selling an average 388 tonnes a year. However, these sales "have virtually come to a halt" in the last three years, the WGC says.

A survey by Central Banking Publications revealed this month that over 70% of reserve managers expect central banks will remain net gold buyers.

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