Right now, the Chinese love for gold isn’t sparkling.

China’s chief foreign-exchange regulator says his country’s interest in the yellow metal is looking limited these days.

Yi Gang, director of China’s soothing sounding State Administration of Foreign Exchange (SAFE), argued that while gold is, in his words, “not a bad asset,” the yellow metal doesn’t offer convincing long-term returns for investors.

The Wall Street Journal notes that Yi, speaking at a news conference, argued that while China’s gold reserves, at 1,054 metric tons, are the fifth-largest in the world, the holdings, at current prices, are only a small part of its foreign-exchange reserves; 1.6%, to be exact.

As the Wall Street Journal points out, China’s gold holdings are closely monitored by investors: In April last year, the price of the barbarous relic shot up after the boys in Beijing revealed that their hold reserves jumped by 454 metric tons since 2003.

Reuters quotes Yi as sounding like no big fan of the yellow metal. He’s going to be cautious, so he says, in adding gold to China’s official reserves.

“gold prices in recent years have risen very nicely, but if we look at the price over the last 30 years, gold prices moved in great swings,” he said. “So as an investment, its yield is not very good from a 30-year point of view."

Yi further acknowledged that, given China’s heavyweight status, any decision by the government there to buy the metal would “definitely” drive up prices.

As we write here in the afternoon, gold has slipped $4.70 to $1119.40. The Market Vectors Gold Miners ETF (GDX), with holdings including Barrick Gold (ABX), Goldcorp (GG), Kinross Gold (KGC), and Newmont Mining (NEM), is down 1.1% to $45.43.

We reached out to Michael Pento, senior market strategist at Delta Global Advisors, for his response to this headline-making news.

Pento’s take: The strategist thinks Yi could be simply trying to talk down the price of gold so he can buy it more cheaply.

“I don’t trust anything they say,” Pento says. “But I certainly don’t think they want to telegraph their position before they get in. The Chinese minister isn’t going to talk about his true intentions to purchase because he doesn’t want to compete against himself and drive up the price.”

Pento adds, “China has no choice but to diversify out of US dollars. There's no other viable alternative. They will use commodities.”

What about Yi’s argument that, in the last 30 years, gold hasn’t proven a smart bet? How does a proud gold bull respond to that kind of trash-talking?

Pento’s response: “He is measuring the return on gold from 1980, when it was in a bubble. Gold has gained a compounded annual rate of around 9% per annum since 1971. Tell him to do that math and tell me if 9% if is such a bad deal.”

For his money, Pento says he remains very bullish on gold, citing the threat of what he sees as elevated levels of inflation in the years ahead. He’s a fan of the metal and the miners, specifically IAMGOLD (IAG) and Eldorado Gold (EGO).

In his morning missive today, Dennis Gartman, editor of The Gartman Letter, wrote to clients that Yi isn’t the only official in China to emphasize gold’s volatility as a reason to avoid material purchases.

Gartman points out that just a short while ago, an anonymous official at the China Gold Association, speaking to The China Daily, said that rather than buy IMF bullion, China would buy gold directly by buying gold mines abroad.

“Perhaps we are to begin owning gold mines rather than gold futures of gold ETFs,” Gartman wrote, adding that, “[I]f the Chinese authorities want to own mines, perhaps we have to consider doing so also.”

China is now the world’s largest producer of gold. Frank Holmes of US Global Investors points out that China’s gold output jumped 11.3% to a record of 314 metric tons in 2009.