Usually any news surrounding the International Monetary Fund (IMF) elicits yawns in the financial markets.
But soon the IMF will announce some news that’ll have investors biting their nails.
You see, China is in the process of negotiating with the IMF to have its currency – known as the yuan or renminbi – become part of the IMF’s monetary reserve denominator, the Special Drawing Rights (SDRs).
Since SDRs aren’t really a currency, the change would be largely a symbolic move. But one of vast importance to the Chinese.
If China is accepted by the IMF, it would become the first emerging market country to join this elite club, along with the likes of the U.S. dollar, British pound, Japanese yen, and euro.
But the story gets more interesting…
In order to join the club, China must reveal to the world one very important piece of information that investors have been wondering about for years.
How much gold does China actually hold as part of its reserves?
How Many Jellybeans in the Jar?
It’s truly one of the greatest mysteries of the investing world.
China hasn’t released a gold number since April 2009, when it said it owned 1,054 metric tons (mt) of the precious metal.
Since then, speculation has been rampant on exactly how much gold China now owns. Guesses have ranged as high as 8,000 mt to 10,000 mt.
Bloomberg Intelligence has made a very reasoned guesstimate, predicting that China’s gold reserves may have tripled since 2009 to roughly 3,500 mt. Bloomberg arrived at this figure based on trade data, domestic gold output (China is the world’s biggest producer), and numbers from the China Gold Association.
If Bloomberg is correct, that would make China’s gold hoard the second largest, behind only the United States. That is, of course, if the United States still has gold…
Many gold enthusiasts believe the gold that once backed our currency to be long gone. The gold, held by the Federal Reserve, hasn’t been fully audited since 1953.
