China’s Secret Gold Hoarding Changes the Global Gold Market Landscape

While reviewing a report by the Financial Times on November 14, 2025, an intriguing phenomenon in the global gold market was discovered. There is a significant discrepancy between the amount of gold China officially reports purchasing and the amount estimated in the actual market. Analysts from Société Générale estimate that China may have purchased up to 250 tons of gold this year, which exceeds one-third of the global central bank gold demand. In contrast, the gold purchase amounts officially reported by the People’s Bank of China were only 2.2 tons in June, 1.9 tons in July, and 1.9 tons in August.

Why is this discrepancy important? Gold is a key tool in challenging dollar hegemony. As Jeff Currie, Chief Strategist of the Energy Pathway Division at Carlyle, pointed out, unlike oil, which can be tracked by satellites, there is no way to know where gold is going or who is buying it. This opacity provides China with the perfect conditions to discreetly pursue its strategy of moving away from the dollar.

Currently, gold prices have surpassed $2,300 per troy ounce, marking a historic high. According to data from the World Gold Council (WGC), the proportion of global gold holdings outside the United States has surged from 10% to 26% over the past decade. It has become the second-largest reserve asset after the dollar. It seems clear that China is at the center of this change.

Why is it so difficult to ascertain the exact figures? Bruce Ikemizu, Director of the Japan Bullion Market Association, bluntly stated, “This year, people do not trust China’s official figures at all.” He estimates that China’s current gold reserves amount to approximately 5,000 tons, double the officially reported amount. If this is true, China could potentially become the world’s second-largest gold holder after the United States (8,133 tons).

The Opacity of Gold Trading and Tracking Methods

So how do experts estimate China’s actual gold purchases? There are several intriguing methods. One approach is to track the movement of freshly minted 400-ounce gold bars. These bars are typically refined in Switzerland or South Africa and transported to China via London, and can be tracked through consecutive serial numbers.

Another method involves analyzing the UK’s gold export data to China. Since large gold bars preferred by central banks are primarily traded in London, examining the volume of gold exports from the UK to China provides some insight into China’s purchasing scale. In fact, London serves as a global hub for gold trading, lending considerable credibility to this estimation method.

Plenum Research, a consulting firm based in Beijing, employs even more sophisticated methods. They calculate the gap between China’s net imports and domestic gold production, as well as changes in the amount of gold held by commercial banks or purchased by retail consumers. Using this method, they estimated purchases of 1,351 tons in 2023 and 1,382 tons in 2022, which is over six times the amount China publicly reported for those years.

Complicating matters further is the fact that China is the world’s largest gold producer. In 2024, China accounted for 10% of global gold production. It is nearly impossible for outsiders to determine whether the gold produced domestically is consumed within the country or stockpiled by the central bank. This opacity adds to the mystery of China’s gold strategy.

Geopolitical Implications and Market Impact

China’s secretive gold hoarding is not merely an effort to diversify investments. It can be interpreted as a direct challenge to dollar hegemony and a strategic preparation for reshaping the future financial order. Especially with the potential for heightened US-China tensions under the Trump administration, it appears that China is accelerating its efforts to reduce its reliance on the dollar.

Nicky Shiels, an analyst at Swiss refiner MKS PAMP, stated, “It makes sense to report only the minimum necessary information if there is fear of retaliation from the US administration.” This suggests that not only China but also other countries may be conducting gold purchases discreetly. In fact, according to estimates by the World Gold Council based on Metals Focus data, only about one-third of official purchases in the third quarter were publicly reported.

This opacity is also affecting the price discovery mechanism of the gold market. Société Générale analyst Michael Haigh assessed that due to the opacity of gold trading, the gold market is “unique and challenging” compared to commodity markets like oil. In a situation where it is difficult to accurately grasp actual demand and supply, market participants end up paying a premium to account for uncertainty.

When former UK Chancellor Gordon Brown publicly announced in 1999 that half of the Bank of England’s gold reserves would be sold, it became evident that transparency does not always yield positive results. At that time, gold prices fell further, and the proceeds from the sale averaged $275 per ounce, about one-eighth of the current gold price. This example helps explain why China might be purchasing gold discreetly.

What is noteworthy in the current situation is that China’s gold purchases are not just about portfolio diversification but are driving structural changes in the global financial system. As gold emerges as an alternative reserve asset in the dollar-based international financial system, cracks are beginning to appear in the existing financial order. In the short term, this acts as a factor driving up gold prices, but in the long term, it could lead to a fundamental restructuring of the international financial system.

Personally, I believe these changes have significant implications for Korea as well. Korea maintains an alliance with the United States while having deep economic ties with China. It seems to be a time for serious consideration of what strategy Korea should adopt amid changes in the global financial system and how the composition of our foreign exchange reserves should be adjusted. Currently, the Bank of Korea’s gold reserves amount to 104.4 tons, accounting for only about 2.4% of foreign exchange reserves, and it may be necessary to reassess whether this proportion is appropriate.

This article was written after reading a news article and adding personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. Responsibility for investment decisions lies with the investor, and no liability is assumed for investment losses based on the content of this article.