At that time, China's official gold reserves were 1,054 metric tonnes (mt). Today, those reserves stand at approximately 2,366 mt, an increase of about 124%. But that does not tell the whole story.

The official reserves are reported by the People's Bank of China (PBOC), the Chinese central bank. But China may also hold gold through other state entities, including the State Administration of Foreign Exchange (SAFE). China is non-transparent about the full extent of its gold holdings. The exact amount of any unreported gold is unknown. Estimates can be formed based on imports from Switzerland via Hong Kong, but those are inexact.

One estimate is that the amount of "hidden gold" held by Chinese state entities is approximately the same as the amount reported publicly by the PBOC. If that estimate is correct, total Chinese gold reserves would be about 4,700 mt, or roughly 58% of U.S. gold reserves of 8,133 mt.

That would make China the second-largest sovereign gold holder in the world after the U.S. and put China ahead of gold powers such as Germany, Italy and France. Still, caution is warranted. Actual official gold holdings in China could be higher or lower than that estimate.

Both the publicly reported gold reserves of PBOC and any hidden state gold reserves are in addition to the amount of privately held gold in China. That figure is even more difficult to estimate. It is widely reported that Indian citizens privately own substantial quantities of gold, with estimates often running into the tens of thousands of tonnes.

China has a population about the same size as India and an equally strong cultural affinity for gold bullion. An estimate of perhaps 10,000 metric tonnes of gold held privately by Chinese citizens seems reasonable, although it cannot be verified precisely.

By any measure, China is a gold powerhouse, even if its reported official holdings still fall short of those of the U.S. But what is China doing with its gold? What is the point of massive gold accumulation by the Chinese government and its people?