In 1974 Chinese Premier Zhou Enlai asked his right hand man, Wang Zhen, to find a way to increase national gold reserves. After several unfruitful attempts, Zhen decided in 1979 to from an ad-hoc military unit whose sole scope was hunting for gold deposits in any part of China.
Led by a university trained geologist with the rank of captain (the present CO is Captain Zhang Zhao) and made up of hand picked men trained in both geology and dealing with most extreme natural conditions, these men have no other task than scour every angle of China for gold using the latest in prospecting technology from domestic, Russian and Western sources.
Their success is telling: in 1974 China mined 10 metric tons of gold per year. In 2011 she mined 355 metric tons. Even accounting for exageration, that's a stunning success. And Captain Zhang Zhao and his men are as busy as ever.
While we may frown upon this being a governative initiative, it's highly telling. Britain sold a sizeable chunk of her gold reserves under Tony Blair and during a recent audit more than a few ingots were found to be nowhere near as pure as records said. The US refused to audit their gold reserves. It won't be long before European governments, ever desperate for income, start selling their reserves. China in the meantime keeps on mining and accumulating yellow metal. Make me happy to have invested there.
China's accumulating gold because their economy is on the verge. As soon as they unpeg from the dollar, which they must eventually, gold will be their hedge. That's my read anyway.
Gold will be everyone's "hedge" after the dollar's (like any other purely fiat money) inevitable implosion. To the extent that they are concerned about the welfare of their economies and societies, govs and central banks have started accumulating gold en large. The Chinese stopped buying Treasuries a long time ago. This lost "demand" is being replaced by Ben's QE 1-infinity. Let's see how long an entity can continue to borrow from itself before the rest of the world refuses to accept its toilet paper currency in exchange for goods and services.