China Gold Demand Voracious - Chinese Yuan Gold Standard?

Tyler Durden's picture

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GetZeeGold's picture


Nothing to see here....move right along.




bankrupt JPM buy silver's picture

But Ben told us and Congress that he's not monetizing the debt..!  LOL

jus_lite_reading's picture

Name one official that does not lie through his teeth and I'll show you a pink unicorn...

BTW, as you are aware, the daily fluctuations in the price of silver mean little overall. Buy today at any price and come back in a few months.

As I said, every tick higher in the "stock markets," every pip lower in the dollars value brings the whole global economy closer to total and complete destruction; in the interim, it makes one's 401k look good and the "economy" look like it's recovering, but it becomes a deal with the devil...


SheepDog-One's picture

Thats the only thing Im watching now, what the dollar does. Stocks are a the boy in the bubble on life support and meaningless, except that dollar plunges like today have to be met with a big stock pump just to stay even.
Its the DOLLAR! Which soon will be removed from world currency status and Id rather have silver and gold than Rubles or Yuan which oil will soon be traded in. Oh yea, and guns.

Imminent Crucible's picture

Great article, but it contains a misconception: the idea that a decline in GLD fund's holdings indicates declining interest in gold.  The opposite is the case here.

GLD doesn't sell gold when the ETF's share price falls, and buy it when the price rises.  That's not how it works.  Gold flows out of the fund's holdings when outstanding shares are redeemed for physical gold.  According to GLD's prospectus, this has to be done in baskets of 100,000 shares, and must be done through an "authorized participant" (aka a big, crooked primary dealer bank, see prospectus for list of AP's).

At today's gold price, it only takes about $14 million to force GLD's manager and custodian to cough up a nice stash of real gold. Since they probably don't have much, they may have to go source it on the open market to meet these redemptions.

Now, consider that in December 2010, the ChiComs lifted the ban on Chinese investment in foreign gold ETFs.  The State Administration for Foreign Exchange may well be using GLD as a covert way to add to China's gold reserves, even as wealthy Chinese investors slip gold out of GLD, $14 million worth at a time.

jus_lite_reading's picture

Correct. That is a misconception that many here hold. For a very small window, ETFs were great to trade before POMO stepped on the equity side, so it is interesting the Chinese allow investment in foreign ETFs... why? Not to add IMO.

Take physical delivery now- it's the only way of knowing you're covered safe.

Math Man's picture

Huge misunderstanding, Imminent.  

While parties can redeem and take delivery, most Metals are added or removed from the ETF by APs arbing the creation/redemption mechanism.

When the price of GLD is below the NAV, APs arb gold out of the ETF by redeeming shares and selling the gold on the open market.

When the price of GLD is above the NAV, APs arb gold in to the ETF by creating shares and buying gold on the open market.

In both cases the make risk free money - and the arb is what keeps the price of GLD inline w/ the NAV.

And as for GLD not having the gold, you can print out the bar list and check out the audit on their website.

It is 100% allocated gold.

akak's picture

And as for GLD not having the gold, you can print out the bar list and check out the audit on their website.


And Alan Greenspan told us in 2005 that housing was "not in a bubble", and Ben Bernanke told me that the "subprime crisis" would not spread to the broader economy, and Bernie Madoff, pre-conviction, told all his customers that his fund was safe and secure, and my good Nigerian email friend assures me that I will share in his $50,000,000 as soon as I give him my checking account information for him to deposit it into.

Such touching naivite.  Or maybe, such disingenuous pro-Establishment misinformation?

TeamAmerica's picture

So everything everybody else says is a lie?  If I buy gold from you, how do I know it's the real thing without smelting it myself?

Better question is how do we know China has any actual gold holdings at all?   They can declare an underground vault holding tons and tons...and who's going to audit it?  It would be the ultimate victory of the communist ideal to scam the capitalist world...create a gold-standard currency without any need to have actual gold to back it up.

GoinFawr's picture

Epistemological conundrums bitchez!

Ask yourself what your criteria for knowledge is, and things may clear up for you, a bit.

Or you could just read the GLD and SLV prospectus, and ask yourself if there is a possibility for a conflict of interest when the proprietors of those ETF's carry large short positions...

Would you buy a license to shoot yourself in the face?

I mean, just saying: it might be wise to hold off any purchases until you know how the mountain of litigation alleging impropriety turn out, hmmm?

akak's picture

So everything everybody else says is a lie? 

Specious argument.

Of course not, but why should anyone put any trust in those with a demonstrated pattern of lying?  Do you REALLY believe that the managers of the silver and gold ETFs GLD and SLV --- JPMorgan and others who are clearly working for, or with, the Federal Reserve and other top financial PTB to prop up the dollar via their massive naked PM shorts --- are REALLY to be trusted to hold all the physical metals which they claim (in copious legalese giving them almost limitless back doors to default) are backing up the shares of these ETFs?

Papasmurf's picture

And whos vault is it stored in?  Allocated my ass.

h3m1ngw4y's picture

somebody did check the bar list. and there were lots of incongruencies found. double entries, serial numbers which were out of the serial range of the suppliers etc. etc.


what did you think where the rumors concerned about the actual holding of the etf originated?

been there done that big time

Raynja's picture

Lately I've been wondering if the point of GLD and SLV ETF isn't to create a new reserve currency with JPM acting as central bank, all you need is some fancy paper and ink that can be exchanged in private transactions or redeemed for a set amount of PM.

Math Man's picture

Exactly.  China is buying because they have an inflation problem.  And that is because they continue to peg the yuan to the dollar and won't let the yuan out of the country.   If they remove the peg - like ZEROHEDGE speculated they would earlier today.  Then - POOF - Chinese inflation and gold demand disappears.

And since the chart above shows that the ETFs have stopped buying , Gold longs are going to be in for a some big, big, big problems.


Long-John-Silver's picture

You've been predicting a crash of gold prices sense it was 100% lower than it's current price.

SheepDog-One's picture

MathMan the fact is anyone in DOLLAR denominated things are the ones who will soon be in deep, deep, trouble. Gold and silver is the REAL world currency!

Math Man's picture

The dollar index is HIGHER than it was when Lehman collapsed.  I know, it is hard to believe, but it is true.

The dollar is not collapsing, but rather PMs are bubbling higher.

SheepDog-One's picture

Dollar INDEX means nothing.

Imminent Crucible's picture

The dollar index is a measure of the dollar against six other worthless fiat currencies. It has little to do with the dollar's purchasing power, unless you want to buy Euros or some other central bank fiction.

The fact is that all the paper currencies are collapsing in purchasing power. It isn't just PM's "bubbling higher", it's every dang thing in the way of grains, softs, metals, energy....

In other words, the supply of paper "money" is soaring while the supply of useful goods is essentially flat, and in some cases declining.

Math Man's picture

Have you ever left the country? 

US dollar purchasing power is higher now than pre-Lehman.  End of Story. 

It always needs to be measured against another currency.


Harmonious_Dissonance's picture

GEN droppinglike  a STONE!  Damn what a shitty stock.

Harmonious_Dissonance's picture

GenOn Energy, Inc. (NYSE:GEN) recently reported adjusted EBITDA of $638 million for 2010 compared to $890 million for 2009

Math Man's picture

Dude, Give it up.

I have over 40 line items in my PA.  One down stock means nothing.

BTW, have you seen your Gold and Silver today?

Papasmurf's picture

You can't visit your gold every day.  You'll wear a path in your lawn and neighbors will find it.

jus_lite_reading's picture

Stop it. You sound like that lying Dr. Deficit in front of congress. The dollar/euro/yen/renminbi should be guaged against gold and silver basket... end of story. That is purchasing power.

InconvenientCounterParty's picture

GLD is effectively a stealth short on physical. It's pure genious. A thing of beauty really. So the first question you have to ask yourself is, when is the right time to sell USD after the Yuan de-pegs? (long evil belly laugh here) Question two is what are your going to trade for the dollars? more virtual money, or real money?

Imminent Crucible's picture

Precisely.  I believe that TPTB endorsed the proliferation of PM exchange-traded funds because it gave them multiple new venues to manipulate the price of gold and silver.  The Comex game was wearing very thin.

bankonzhongguo's picture

At least some government is taking a serious interest in a gold-backed currency.

I don't think the Chinese can do anything less than unpeg from the USD and back the CYN with gold - even if it was a minuscule amount.  The act alone in this environment would be more than symbolic.

Likewise, China can still force its own currency to a new peg with the euro and dollar and anytime for any reason.

Imagine if CYN went to a hybrid like the XDR, but adding in PM, copper and rare earths and then forced all export settlements into CYN.  That "unpeg" could turn into a re-peg to the detriment to the US.  Prices could double overnight at Wal-mart because there is no other source for these goods.

The Chinese have figured out they sell us their labor and we give them paper.  Payback may be a bitch.  In time the China system will fail - the country is too big and feudal to run centrally.

Hugh G Rection's picture

I'm looking to invest in a puppymill.  Anyone know which breed of dog is the most nutrient rich?

StychoKiller's picture

You are what you are dogs, so feed'em nutrient-rich food.

Turd Ferguson's picture

Every time I've ever said this...that China will, one day, partially back its currency with gold so that it may become a "reserve currency"...people scoff and tell me I'm an idiot.

They're right, I am an idiot, but that doesn't mean that this isn't happening.

Spalding_Smailes's picture

They must prove they are a safe haven for assets .... When is that going to happen ?


Stability , Tiananmen Square , the Jasmine Revolution , the censorship of the internet , no banking transparence , the peg , child labor , no social safety net , ect , ect , ect .......... Who can trust the accounting book businesses , province • local borrowing all murky , fogged up lies .......


Long , long time down the road ....

dick cheneys ghost's picture

in another sign of weakness, China threatens to expel foreign reporters....

Spalding_Smailes's picture

Noooooooooooooooooooooo really ...... ?

But , but , but someone just told me they where the new Reserve Currency .......... Bwahahaha, Whew ........

Snake's picture

"Who can trust the accounting book businesses , province • local borrowing all murky , fogged up lies ......."

as in the fogged up lies of Domingo Cavallo before the 2001 crash in Argentina?  you should know a lot about that, no?

StychoKiller's picture

EVERY Govt is an organized criminal setup!  Do you want to pay extortion to the Gambinos, or the Chin-lis?

doggings's picture

Turd, can I call you that? sounds a bit rude :)

youre not the only one who thinks that, Bob Chapman does too

I think it's inevitable at some point.

Western powers have tried to destroy gold as a backing for currencies for many years. Presently the major media won’t touch the story and that is understandable. For years we have been writing about the SCO  ( or the Shanghai Cooperation Organization

Few have been listening and few have been interested in what their mission is and what they have been up to. Some of the members are large oil producers and some, like China, are large oil users. Some have very large US dollar surpluses. As well, some are large commodity and gold and silver buyers. In fact, members are in a great part responsible for driving these prices higher.

It is debatable, but we believe there is a conscious effort to accumulate gold and silver, dump dollars and to back their currencies with gold.

Oh regional Indian's picture

Somehow, I still cannot see gold shine too much further. Went and traded in a big bit for silver today. Dealer thought I was nuts. But he had the same look a year ago when I told him silver would double.

Gold, old, fold.... sun is sick. Got to think outside the box folks. It's a change of the ages happening here!

Gold, oil, war.....

Silver linings abound.


StychoKiller's picture

Bigger question is, is the Age of Kali ending, or is Kali just getting warmed up?

traderjoe's picture

But Spalding says you can't buy gas with it, therefore it's not money!?

SheepDog-One's picture

Well Spalding is a liar, here I know of 2 gas stations/truck stops that DO take PM's!

william the bastard's picture

The article is issued by "Goldcore". That ought to key you in to a bit of bias.

Ray1968's picture

"$1,500/oz for gold and $40/oz for silver remain viable short term targets"

If you are short term, just stick to your GLD and SLV. If you are long term... cold metal in your hand feels awful good!

RagnarDanneskjold's picture

Chinese imported 200 metric tons in the first two months of that sustainable? The average Chinese investor is no more intelligent or rational than the average American investor.

Cognitive Dissonance's picture

You are comparing apples and lemons, we Americans being lemons.

The Chinese government is actively encouraging the Chinese people to buy Gold. The American government claims it doesn't even know what Gold is. And if it did know, they claim Gold is a barbarous relic only the Chinese would try to eat.

Nuff said.

Oh regional Indian's picture

CD, that is where the rub lies for me. 

When has the chinese government, or any govewrnment done anything good (like really good) for their people? I'd say never.

Why are they suddenly being such good investment advisors to their people?


Cognitive Dissonance's picture

They aren't trying to do anything "good" for their people. They are simply doing what the Chinese have always done very well, to organise large numbers of their own people to work together for a common cause. The only question is the definition of "common".

I suspect that soon enough, when Gold has quadrupled in price and there is a global cry for the reintroduction of at least a partial Gold standard, that the Chinese government will tell it's people to turn their Gold over to the government in the interest of national security and the common good. This will, of course, be done at the end of a gun.

I'm not saying it will work, only that this is what they are trying to do, to get many many people all rowing in the same direction. The government itself would upset political alliances if it really tried to buy Gold in huge quantities. It must still play the present global fiat game. But it can tell it's people to prepare for the next game.