Extracts from commodityonline 14th March 2010

Western investors have long speculated China will start Buying Gold and selling its hoard of US Dollars at some point. (China’s hoard could be literally trillions of US Dollars.) It would be the first step in a “Doomsday” scenario for the greenback.

Just imagine – China trades in its Dollar reserves for Gold Bullion. The value of the Dollar crashes…and US interest rates soar, as China is no longer willing to buy US government Treasury bonds.

However, Mr. Yi is to be taken at his word, in short, China doesn’t have plans to Buy Gold in the open market.

So how would China acquire gold if it doesn’t buy it? This is where it gets interesting…

An official from the China Gold Association told the China Daily that rather than acquiring Gold from the IMF, China would Buy Gold directly by buying gold mines “abroad”. Rather than buying physical gold in the open market (where China would be the 800-pound gorilla in the room), China plans to buy future production instead.

Source… commodityonline.com