Bank official: use forex to buy more gold

The country's huge foreign exchange reserves should be used to increase national gold holdings and to purchase resources such as oil and metals, according to Xiang Junbo, deputy governor of the People's Bank of China. It is believed that this strategy has been put forward by a number of Chinese economists following the announcement of a new investment agency tasked with putting a portion of the country's US$1.2 trillion in foreign exchange to better use. However, Xiang may be the first senior government official to say this publicly, the South China Morning Post reported. China's gold reserves have remained unchanged for several years while the country's push to acquire natural resources abroad has prompted international concern. Xiang also championed using the money to buy stakes in state banks and other commercial lenders to help them expand overseas. About two-thirds of China's foreign exchange is currently invested in US dollar assets, principally Treasury bills.