China’s official gold reserves are reported to stand at 2,264 tonnes, making it the seventh-largest gold holder globally. But does this figure reflect reality? Many analysts, including Dominic Frisby, argue that China’s actual reserves are likely far larger, a possibility with profound implications for global finance and geopolitics.
In this post, we’ll delve deeply into Dominic Frisby’s analysis, as presented in his articles “The Truth About China’s Gold” (July 2023) and “How Much Gold Does China Have? A Lot More Than You Think” (August 2018). We’ll explore his ideas on China’s gold strategy, consider the perspectives of other commentators, and discuss what this means for the BRICS alliance, the U.S. dollar, and the yuan.
Finally, we’ll examine the intriguing possibility of the United States revaluing gold to manage its debt and what this could mean for China and other gold-heavy nations. And, we’ll attempt to answer the key question: just how much gold does China really have?
Dominic Frisby’s Core Argument: A Hidden Hoard
Dominic Frisby provides a compelling case for why China is likely underreporting its gold reserves. He outlines several interrelated factors, backed by specific data:
1. Gold Production and Retention
China is the largest gold producer in the world, mining approximately 380 to 400 tonnes of gold annually. Over the last two decades, China has mined an estimated 7,000 tonnes of gold in total, according to Frisby. This figure alone exceeds the official reserves of all but the top three global gold holders—the United States, Germany, and Italy.
Unlike other major gold producers such as Australia, South Africa, and Russia, nearly all the gold mined in China stays within its borders. Gold exports are heavily restricted, meaning much of this annual production could be quietly funneled into state reserves or other strategic holdings.
2. Gold Acquired Through Proxies
Beyond domestic mining, Frisby highlights that China uses intermediaries—state-owned enterprises, sovereign wealth funds, and private buyers—to accumulate gold on international markets. These purchases are often conducted discreetly, ensuring that the acquisitions are excluded from official reporting to the International Monetary Fund (IMF).
Between 2003 and 2009, China revealed that it had secretly added 454 tonnes of gold to its reserves, a move that surprised global markets. Since 2015, China has sporadically updated its official figures, but Frisby suggests these updates represent only a small fraction of actual purchases.
3. Strategic Underreporting
China’s official reserves of 2,264 tonnes likely represent the tip of the iceberg. Frisby estimates that, including undeclared gold held by state-owned enterprises and other entities, China’s true reserves may be closer to 10,000 tonnes. This figure would place China second only to the United States in total gold holdings and could even rival U.S. reserves in the near future if current trends continue.
4. Gold’s Role in Sovereignty and Strategy
For China, gold is more than just a hedge against currency volatility—it is a tool for financial sovereignty. Unlike fiat currencies held in foreign reserves, gold is immune to sanctions and external manipulation. Frisby highlights that China’s long-term strategy is to challenge the dominance of the U.S. dollar in global trade and to position the yuan as a credible alternative reserve currency. Gold is a cornerstone of this plan.
Revisiting Frisby’s 2018 MoneyWeek Article
Frisby’s earlier article for MoneyWeek, written in August 2018, expands on these ideas, offering a long-term perspective on China’s gold accumulation. He notes that in addition to the estimated 7,000 tonnes of gold mined domestically since 2000, China has imported over 6,700 tonnes of gold through Hong Kong, according to trade data. This figure excludes imports through Shanghai and other direct channels.
Frisby speculates that China may be preparing for a future announcement of dramatically higher reserves—possibly to back a gold-linked digital yuan. Such a revelation could disrupt the global gold market, sending prices soaring and undermining confidence in fiat currencies.
What Are Other Experts Saying?
While Frisby provides the most detailed and convincing arguments, other commentators have added valuable perspectives:
- Goldbroker.com (2016): The authors argue that China’s gold accumulation is closely tied to the BRICS nations’ collective efforts to create a multipolar financial system. They suggest that a gold-backed BRICS currency could provide an alternative to the dollar for international trade.
- Fisher Investments (2015): This article takes a contrarian view, arguing that the dollar’s dominance is based on the trust and liquidity of U.S. financial markets, not gold. While this is a valid point, it arguably underestimates the psychological and symbolic power of gold in times of geopolitical uncertainty.
Could the U.S. Revalue Gold to Manage Its Debt?
One intriguing scenario that has gained attention in recent years is the possibility of the United States revaluing gold to address its spiraling national debt, which now exceeds $36 trillion.
How Gold Revaluation Works
Gold revaluation involves the U.S. government significantly increasing the official price of gold, currently set at $42.22 per ounce—far below market value. By marking up the price of the 8,133 tonnes of gold held by the U.S. Treasury to align with or exceed market prices, the government could dramatically boost the value of its reserves. This would:
- Increase Asset Values: The higher gold valuation would offset liabilities, making the U.S. balance sheet appear more solvent.
- Provide Fiscal Flexibility: A revalued gold reserve could allow the government to issue more debt without increasing perceived financial risk.
- Weaken the Dollar: A weaker dollar could make U.S. exports more competitive globally while reducing the burden of dollar-denominated debt for other countries.
Implications for China and Other Gold-Heavy Nations
Revaluing gold would not only benefit the U.S. but also any country holding large gold reserves. For China, Germany, Russia, and other gold-heavy nations, higher gold prices would increase the value of their reserves, bolstering their financial positions and reducing the relative dominance of fiat currencies like the dollar.
A Gold-Driven Reset?
If the U.S. were to revalue gold, it could set the stage for a global financial reset where gold plays a more prominent role in monetary systems. Such a move could create new opportunities—and risks—for countries looking to reduce their dependence on the dollar and hedge against geopolitical instability.
So How Many Tonnes Does China Really Have?
While no one outside China’s leadership knows the exact number, estimates based on production, imports, and strategic accumulation provide intriguing possibilities:
- Official Reserves: 2,264 tonnes, per China’s own reports to the IMF.
- Domestic Mining: An estimated 7,000 tonnes since 2000, most of which likely remains in China.
- Imports: At least 6,700 tonnes imported through Hong Kong alone over the last two decades, with additional unreported imports likely through Shanghai and other ports.
- Frisby’s Estimate: Combining these figures, Frisby suggests China’s total reserves—including undisclosed state and private holdings—could be closer to 10,000 tonnes.
This would place China on par with or even ahead of the United States (8,133 tonnes), fundamentally altering the balance of power in global gold holdings.
Conclusion: China’s Strategic Gold Play and the Road Ahead
Dominic Frisby’s insights provide a fascinating window into China’s gold strategy, which appears to be as much about geopolitics as economics. By quietly amassing gold, China is preparing for a world where trust in fiat currencies may falter, and tangible assets like gold regain their historical importance.
With estimates suggesting China’s total gold reserves could be in the range of 10,000 tonnes, the global financial order may be on the cusp of significant change. Whether through BRICS collaboration, a gold-backed yuan, or a broader revaluation of gold, China’s strategy will have profound implications for the dollar, the yuan, and the future of international finance.
For investors, policymakers, and geopolitical observers, the message is clear: gold is back in the spotlight, and its role in shaping the future of global finance cannot be ignored.
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