Could it be that 2,700 metric tons of gold — more than half of the world’s annual global production — is being hidden in Communist China? 

The question arises in a new report from a Singapore-based newspaper and adds to mounting speculation that China has amassed a larger-than-reported stockpile of the metal that is the basis of monetary value.

The four-figure gap was discovered by economist Chen Long after he compared the total gold holdings in China — incorporating reported holdings of retail buyers, regional banks, and the People’s Bank of China — with the country’s import and production numbers. 

He reckons that China’s official gold holdings last year reportedly only rose by 431 metric tons. The number for gold imports and production, however, came out to 1775 metric tons. Given that China exports a negligible amount of gold, the estimates leave 1,300 metric tons unaccounted for. 

Adding that figure to the number of “missing” metric tons of gold Mr. Long estimated for 2022 — around 1,400 — the number swells up to 2,700 metric tons over the two-year period. The value of the dollar has collapsed to less than a 2,400th of an ounce of gold. 

It is common to see gaps in the numbers, Mr. Long notes, but they usually only amount to a few hundred metric tons at most. “Such a huge gap is rare.” 

Mr. Long offers various explanations for the discrepancy. The first being that China’s central bank has simply underreported the amount of gold it actually bought. 

If it is indeed the case that all of the “missing” gold from the past two years can be attributed to the People’s Bank of China, it would mean that the bank has doubled its stated gold reserves to nearly 5,000 metric tons. 

Given that it would have “massively increased” its gold position, Mr. Long suggests that the central bank “may want to withhold a full disclosure in order to avoid shocking the market.” 

A second possibility is that there are “other buyers we do not see,” adding that, “it is not inconceivable that the sovereign wealth fund may have also bought some gold.” China’s sovereign wealth fund is a state-run investment fund that holds surplus government revenues.

A final option he provides is that the numbers for the bank’s reduction of gold holdings were overestimated while households’ purchasing of gold was underestimated. 

“They may have increased their gold holdings without making disclosures,” he explains, “although we doubt that such increases could completely offset the decline of gold holdings at the Chinese banks.” 

The chance that China’s central bank underreported its gold reserves isn’t out of the realm of possibility — nor is it the first time that the bank has been accused of owning far more gold than it has officially declared.  

Back in 2022, stockbroker and gold scholar Alasdair McLeod suggested that the People’s Bank of China likely “has as much as 30,000 metric tons hidden in various accounts, but not declared as official reserves.”

Gold commentator Ross Norman offered a more moderate estimate of around 19,000 metric tons. 

“Chinese Central Bank gold holdings have apparently been entirely unchanged since mid-2019 at 1,948 metric tons. But few of us believe that,” he told MoneyWeek. “Put an additional zero on the end and I should not be surprised if that is not much closer to their official holding.” 

Both estimates would place China’s hoard far above America’s, which boasts the world’s largest reported gold reserves with more than 8,000 metric tons. 

Others question whether any reports of official data on gold reserves can be trusted at all.