The People’s Bank of China secretly tripled its gold reserves, according to Bloomberg. The fact that China has more gold reserves than the 1,054 tons from the last official announcement in 2009 is clear, but the actual amount is one of the market’s best kept secrets. Bloomberg Intelligence estimates the gold reserves add up to 3,510 tons by now.

With 3,510 tons in gold reserves, China would have the second largest amount in gold reserves after the US with its 8,111.5 tons. Bloomberg Intelligence calculated the figure based on trading data, domestic output, and data from the China Gold Association.

China gives an update on its gold reserves only once every few years. The last time was in 2009, when it announced that it had doubled its gold reserves; a new announcement will entail a strong increase in China’s gold reserves as well, without a doubt. This could be the spark the gold price needs to get going again. (Maybe that is why they are postponing it as long as they can?)

Gold Reserves of China: Pillar for the Yuan

A strong increase in China’s gold reserves could be seen as a way to put China’s currency – the yuan – on the map versus the American dollar. Chairman of the People’s Bank of China – Zhou Xiachuan – has never kept it a secret that he wants to turn the yuan into a global currency, which includes reserve currency status at the IMF.

At the moment, the US dollar is the most important currency for the IMF with 63% of the International Monetary Fund. The euro is listed in second place with 22%. By positioning the yuan as a global currency, China hopes for the currency to be included in the SDR’s (Special Drawing Rights) – an artificial currency brought to life by the IMF and one that has regained attention since the financial crisis.

For now, SDR’s are composed of the US dollar, the euro, the Japanese yen, and the British pound. The composition of this basket of currencies will be reviewed towards next year and the decision, according to experts, will be taken during the May or October meeting. An update of China’s gold reserve would positively affect the country’s chances.