With only 1658 tonnes of gold reserves this would put China in 5th position behind the United States (8133 tonnes), Germany (3383 tonnes), Italy (2451 tonnes) and France (2435 tonnes). The United States, the biggest official sector gold holder, holds almost 73 percent of its reserves in gold. The country thus overtook Russian Federation to become the fifth largest holder of gold in the world.

“On the basis of our assessment of the value of gold assets and our analysis of price changes, and on the premise of not creating disturbances in the market, we steadily accumulated gold reserves through a number of worldwide and domestic channels”, it said. Despite the tonnage increase, gold now accounts for 1.65 per cent of China’s total forex reserves, against 1.8 per cent in June 2009.

Secondly, China is struggling with an equity market in freefall and some have suggested that the timing of the declaration is to give comfort to domestic investors that their reserves are size-able… but that makes no sense either, because they aren’t!

“If the low figure is correct then that is actually very bullish because there is plenty of scope for continued buying for many years to come”, said Ross Norman, chief executive of bullion brokerage Sharps Pixley in London, referring to China’s gold reserves.

The extra gold would help guarantee the security, liquidity and value of China’s global reserves, it said. The price rout worsened the outlook for miners, with shares of Barrick Gold dropping to the lowest since 1991 on Friday. Futures dropped to the lowest since 2010 on Friday as signs of improving USA economic growth further diminished the metal’s appeal as a haven. “If anything, it was slightly surprising that it wasn’t more”, Bhar added. As a country with the world’s largest economy by some measures, one would have expected they would be well north of the German figure really.