Over the last few years, the China government has implemented new measures to make its currency—the yuan —an open currency to be used by investors globally. Ten years ago, it was very difficult for even large investors to trade in the Chinese yuan. That is no longer the case today and the People’s Bank of China has given every indication that China wants the yuan to be considered on level with the U.S. dollar and the euro. With that in mind, let’s look at China’s gold bullion reserves—gold bullion held by the central bank—when compared to both Europe and the U.S. Keep in mind that the People’s Bank of China has always referred to gold bullion—even against its own yuan—as the only true hard currency. Gold (in tonnes) – at the end of 2011 European Central Banks (all 17 countries) 10,401.3 U.S. Federal Reserve 8,133.5 People’s Bank of China 1,054.1 Source: World Gold Council As these numbers show, China is well behind when it comes to backing the yuan with the amount of gold that Europe and the U.S. can back their respective currencies with. Source: World Gold Council It is no coincidence that, when China implemented its most sweeping measures to make the yuan more open to the world in 2009, it simultaneously announced its most sweeping measures when it came to gold bullion. In 2009, China ordered its miners to no longer export any gold bullion. China is the largest producer of gold bullion in the world; 350 tonnes per year. This 350 tonnes yearly is now making its way to the vault of the People’s Bank of China. The issue with China is that it keeps its information to itself—something it will have to change if it wants the yuan to be taken seriously. When the country admitted that its gold bullion reserves went from roughly 600 tonnes in 2009 to 1,054.1 tonnes in 2011, the world was stunned. What a dramatic increase! Of the roughly 2,800 tonnes of gold bullion supplied to the world in 2011 (source: World Gold Council), it is assumed that China is on the hunt for most of it, to back the yuan. How much is the People’s Bank of China buying? Hong Kong is an open economy that reports all of its economic statistics. If Hong Kong is any indication of China’s desire to own gold bullion to back the yuan, then the buying binge is extreme. In 2009, China purchased four tonnes of gold bullion from Hong Kong. In 2011, China purchased 46 tonnes of gold bullion from the small island nation (source: China Daily ). That’s an 11-fold increase! Dear reader, I believe strongly that …