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People’s Bank of China Positive On Gold Due To ‘Value Preservation’; Concerned About Euro, Dollar And Paper Currencies

Tyler Durden's picture




 

From GoldCore

People’s Bank of China Positive on Gold due to ‘Value Preservation’; Concerned About Euro, Dollar and Paper Currencies

Gold and silver remain supported by continuing macroeconomic and geopolitical uncertainty. Inflation, the European sovereign debt crisis, conflict in Libya and the wider Middle East and the nuclear disaster in Japan are all factors which will likely result in gold reaching new record nominal highs in all currencies sooner rather than later.

Gold and silver’s record highs yesterday were barely reported in the non financial press and media yesterday which is another sign of the lack of animal spirits and popular participation in the bullion markets. One of many strong indications that gold and silver remain far from the speculative bubbles suggested by some.

The US dollar and Swiss franc are down 1% and 2.5% respectively so far on the week. While sterling and the yen have fallen nearly 2% against gold in the week so far.

People’s Bank of China Favours Gold Over Euro, Dollar and Paper Currency due to ‘Value Preservation’

The People’s Bank of China are very positive on gold in their just released annual Financial Markets Report. They remain concerned about risks posed to fiat currencies such as the dollar and euro, about asset price bubbles internationally and the risk competitive currency devaluations poses to fiat currencies.

The report is much more positive than last year when they appeared to talk down gold’s prospects somewhat. Skeptics suggested that this was in order to allow them to continue accumulating gold without the price running away from them.

The Chinese central bank said that inflation risks in economies internationally will support demand for gold, with prices for the precious metal likely to continue to make record highs.

While the risks of falling gold prices shouldn’t be ignored, political conflict is likely to support higher gold prices.

Inflation risks mean demand for gold will remain strong and investment demand from a 'value preservation' angle will be very strong supporting gold at higher levels.

It said it is considering allowing more foreign financial institutions and companies to participate in China's interbank bond market, beyond international development agencies, and it is studying gradually opening the country's gold and futures markets to overseas yuan holders.

The Chinese are clearly attempting to position their central bank, the PBOC, as a powerful rival to the Federal Reserve and their yuan/ renminbi as an alternate reserve currency.

Senior and influential Chinese policy makers, bankers and government officials have clearly stated why they see gold as an important currency reserve and monetary asset. The PBOC and possibly SAFE are likely to be buying all dips aggressively and providing significant demand and massive support to the gold (and possibly even the silver) market.

The record demand for gold as a store of value from the Chinese people is being emulated by their increasingly powerful central bank  and other financial institutions which is another bullish factor for gold.

NEWS

(MNI) - China PBOC Sees Dollar Weakness, European Debt Risk In 2011

The U.S. dollar is generally expected to weaken this year, even if the European debt crises provide some temporary support, the People's Bank of China said in its 2010 international financial market report issued Friday.

The 125-page report provided a broad outlook for global markets in the year ahead, cautioning that the economic recovery will be dogged by the debt crises on Europe's periphery. "The recovery momentum of the world economy will continue, but all parties should enhance policy cooperation and avoid competitive currency depreciation and trade protectionism," the report said.

The central bank also warned on inflation risk rising from crude oil, grain and other commodity prices. Global commodity prices still have room to rise, the bank said, though gold's recent record prices prompted a warning of the risk that prices could fall in the period ahead.

The U.S. dollar will be "generally weak" this year as a result of the slow U.S. economic recovery, low interest rates as well as the trade and current account deficits.

"However, the risks from European sovereign debt still remain and geopolitical risk may spread, which will give the U.S. dollar temporary strength," it said. Short-term interest rates in the major economies will rise this year, though the increase will be capped by the weak recovery momentum. The medium-to-long-term treasury yields of the major economies will also rise.

Major economies will find it difficult to bring their debt levels under control this year as a result of economic weakness and fragile financial systems.

The PBOC also said it will boost capital account convertibility and broaden the channels by which capital flows on and offshore. It said that the domestic interbank and futures markets could be further opened up to foreign portfolio investment.

(Bloomberg) -- Gartman Won’t Short Stocks As Silver Outperforms Gold

Newsletter writer Dennis Gartman says silver outperforming gold “tends to pull” all risk assets higher; won’t short indexes as silver outperforms gold. For chart of silver/gold ratio vs S&P 500: Gartman to buy gold at $1395-1405,

<Editors Note: Gartman has been negative on silver for a while and recently said it was ridiculously overbought when silver was below $36/oz. With regard to precious metals, he does not have a good record of “timing the market” in recent years and given rising volatility in all markets investors would be prudent to maintain a buy and hold strategy.>

(Bloomberg) -- UBS Favors Oil, Platinum, Lead, Palladium, Neutral on Copper

UBS AG is favoring crude oil, platinum, lead and palladium over the next three to six months. The previous favorites copper, coal and iron ore are now “neutrally rated” while nickel, steel, uranium and aluminum are the least preferred, UBS analyst Peter Hickson said in a report dated today.

Editors Note: UBS Precious Metals division are currently bullish on gold and silver and bearish on palladium and platinum .

(Bloomberg) -- ‘Black Swan’ Creates Gold Buying Opportunity in Selloff: TD

“Black swan” events are likely to create buying opportunities for gold as the metal declines in the short term on uncertainty, TD Securities says in a note to clients.

“Based on the last three major episodes of elevated market uncertainty, a future “black swan event” that threatens the global economy and financial system stability is likely to trigger another short-lived gold selloff”: TD

“The metal should perform well longer-term, especially if U.S. and other monetary authorities monetize the shock”: TD

TD defines black swan as: “an event or occurrence that deviates beyond what is normally expected of a situation, and that would be extremely difficult to predict”

(Bloomberg) -- Gold May Advance on Libya, Europe Debt Concern, Survey Shows

Gold may extend gains from a record as fighting in Libya and Europe’s debt crisis spur demand for an alternative investment, a survey found.

Seventeen of 19 traders, investors and analysts surveyed byBloomberg, or 89 percent, said bullion will rise next week. Two predicted lower prices.

Gold for April delivery was up 2.2 percent for this week at $1,446.70 an ounce at 12:23 p.m. yesterday on the Comex in New York after reaching a record $1,448.60 earlier that day.

U.S. and allied warplanes carried out further strikes against Muammar Qaddafi’s ground forces as the leader’s loyalists increased their attacks on cities. Portugal moved closer to a bailout after Prime Minister Jose Socrates’s offer to resign left his government in limbo as European Union leaders try to address the region’s debt crisis.

“The market got a boost from ongoing violence in the Middle East and North Africa region,” said Andrey Kryuchenkov,an analyst at VTB Capital in London. European debt “troubles” linger, and “as far as gold is concerned, it is exactly such fears that drove bullion higher late last year,” he said.

The attached chart tracks the results of the Bloomberg survey, with the red bars derived by subtracting bearish forecasts from bullish estimates. Readings below zero signal that most respondents expect a decline. The green line shows the gold price. The data are as of March 18.

The weekly gold survey that started more than six years ago has forecast prices accurately in 202 of 355 weeks, or 57 percent of the time.

This week’s survey results: Bullish: 17 Bearish: 2 Neutral: 0

(Financial Times – Print Edition) -- Small-time gold miners get fair trade seal of approval
We have got used to the taste of Fairtrade coffee, chocolate or sugar and know all the good reasons why we should buy it. But on Vale...

(Financial Times – Print Edition) --Turbulent times take a toll on optimism
 Amid the good cheer among  the world's watch and jewellery makers at Baselworld, and  depending on geopolitical events in Japan and north Af...

(Financial Times – Print Edition) --  Precious pieces lost in cash-for-gold rush

You don't take a piece of Van Cleef and melt it. That's like burning a Picasso for the frame," laments Tobina Kahn, vicepresident of House...frame," laments Tobina Kahn, vice president of House...

 

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Fri, 03/25/2011 - 09:16 | 1099065 bankrupt JPM bu...
bankrupt JPM buy silver's picture

Gold is in a bubble.  Buy NFLX.

Fri, 03/25/2011 - 09:24 | 1099091 Larry Darrell
Larry Darrell's picture

You are completely correct.

Plus, all of the economists have said the Bernank can't do a QE3 and the dollar is due for a huge flight to safety as Europe falls apart.

/sarc

Fri, 03/25/2011 - 09:42 | 1099159 NoClueSneaker
NoClueSneaker's picture

+1

Your comment on BM from yesterday krautized for very limited audience ...

Fri, 03/25/2011 - 09:37 | 1099095 TruthInSunshine
TruthInSunshine's picture

Cue the panic in Japan.

When the Japanese Government admits the following, and it is the front page headline on the New York Times as of now, it is on...

...like Donkey Kong.

They are basically admitting they can't control the reactor site anymore.

Japan Quietly Evacuating a Wider Radius From Reactors
By DAVID JOLLY, HIROKO TABUCHI and KEITH BRADSHER 26 minutes ago

Officials said they would assist people who want to leave the area from 12 to 19 miles outside the plant, in a sign that they hold little hope of controlling it.

The authorities said they would now assist people who want to leave the area from 12 to 19 miles outside the crippled plant and said they were now encouraging “voluntary evacuation” from the area. Those people had been advised March 15 to remain indoors, while those within a 12-mile radius of the plant had been ordered to evacuate. The United States has recommended that its citizens stay at least 50 miles away from the plant.

Now let's just wait and see how long that 19 miles becomes 38, and so on.

Fri, 03/25/2011 - 09:11 | 1099032 bob_dabolina
bob_dabolina's picture

Perhaps PBOC should look at China and re-evaluate just what exactly it's concerned about.

They can start by reading:

http://www.zerohedge.com/article/sbs-datelines-documentary-chinas-64-million-empty-apartments

Fri, 03/25/2011 - 21:31 | 1101895 edotabin
edotabin's picture

No....

The headline will read:

HUGE fallout cloud covers entire US. Despite that, an odd atmospheric condition keeps everyone in Japan safe. 9 billion empty apartments in China now in great demand as nuclear fallout will never ever ever ever ever reach China.

Exaggerating to make a point and no disrespect to the tragedy in Japan. News tories are ABSOLUTE BULLSHIT

Fri, 03/25/2011 - 09:11 | 1099035 LRC Fan
LRC Fan's picture

Psh, people don't want to buy gold.  Ask Bennny Boy. 

Fri, 03/25/2011 - 09:11 | 1099041 Oh regional Indian
Oh regional Indian's picture

PBOC is a state owned entity and a propaganda mouthpiece when it speaks.

So, what does the astute individual do to really read the tea-leaves (green of course) here?

Is gold being sold to the masses for some reason? Someone said that the Chinese govt. encouraging their serfs to load up was western porpaganda?

Whose lying tongue are you/I going to believe?

Time to have the courage of one's own convictions. I'm wary and weary of so much tok tok. 

Toking a story-line.

ORI

http://aadivaahan.wordpress.com/2011/03/24/lets-start-from-the-very-beginning-a-very-good/

Fri, 03/25/2011 - 09:43 | 1099162 Roger Knights
Roger Knights's picture

"Is gold being sold to the masses for some reason? Someone said that the Chinese govt. encouraging their serfs to load up was western propaganda?"

Here's my 'take": China has made some sort ofcommitment to the International Financial Community, probably informally, that it would Act Responsibly wrt Gold and not upset the applecart. So it can't make large official gold buys, or even large off-the-record gold buys. Nor can it, probably, officially "push" gold to its citizens.

But what it can do is signal unofficially to its crony-pals that gold is a Buy, and facilitate gold trading, gold investing, etc. in various arms-length methods. That's what it's been doing.

Fri, 03/25/2011 - 09:52 | 1099190 Oh regional Indian
Oh regional Indian's picture

That is a good take Roger.

ORI

Fri, 03/25/2011 - 10:13 | 1099270 Bastiat
Bastiat's picture

I think the main motivation is to control US exported inflation -- and the social unrest that results.  Another way to say the same thing: it gives the people a way to protect their wealth.  Strange concept for a government, eh?

Fri, 03/25/2011 - 10:10 | 1099255 Kina
Kina's picture

Can attest that gold buying is popular in China among those with some spare cash, see it reported quite often on HK tv and also on mainland China tv. Gold bars also make nice wedding gifts.

Fri, 03/25/2011 - 09:13 | 1099042 cat2
cat2's picture

That is right, there is no animal spirits for gold/silver in the US.  I still cannot convince family to buy any.  Now everyone says it's already moved up.

Fri, 03/25/2011 - 09:11 | 1099045 jesse livermoore
jesse livermoore's picture

but, I thought you could not eat gold ?  what?  barbaric relic?  huh? 

Fri, 03/25/2011 - 12:50 | 1100107 Bay of Pigs
Bay of Pigs's picture

Not only that, it doesn't cost anything to dig it out of the ground. Silver's cost is only $5, so gold can't be much more than that.

LMAO. 

Fri, 03/25/2011 - 09:13 | 1099046 ItFarmer
Fri, 03/25/2011 - 12:59 | 1100140 Bay of Pigs
Bay of Pigs's picture

He is correct, and proves beyond the shadow of a doubt that gold is nowhere near a bubble.

“In comparison, today's huge precious metal bull market is greeted with yawns, that is, if it is greeted at all. I've been calling the current gold/silver market the "great stealth bull market." Ask the average man or woman on the street what's happening to precious metals, and they'll give you a blank stare and maybe a "Duh." Ask them if they own any gold or silver, and they'll give you a sheepish "Nah."

Richard Russell

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/3/25_Richard_Russell_-_Gold_To_Catch_Fire_%26_the_Public_Will_Notice.html

Fri, 03/25/2011 - 09:14 | 1099050 LawsofPhysics
LawsofPhysics's picture

Bahhahahahahahaha!  "concerned about paper currencies".  Let yours float mother fucker!  All paper reverts to its true value eventually.

Fri, 03/25/2011 - 09:33 | 1099131 spartan117
spartan117's picture

They will, just as soon as the USD is no longer the reserve currency of the world.

Fri, 03/25/2011 - 09:42 | 1099157 LawsofPhysics
LawsofPhysics's picture

I hope so, I have some of their currency.

Fri, 03/25/2011 - 09:58 | 1099210 falak pema
falak pema's picture

so do 'mutti ficking' guys...

Fri, 03/25/2011 - 10:12 | 1099260 Kina
Kina's picture

maybe when BB stops printing by the hundreds of billions.

Fri, 03/25/2011 - 09:16 | 1099067 alien-IQ
alien-IQ's picture

Let's see if the $DXY can break above 76 today (good grief...how pathetic is that?:-()

Fri, 03/25/2011 - 09:18 | 1099069 johny2
johny2's picture

And Fisher talks about not being able to see dollar losing its reserve currency status. Either he is completely delusional or is lying, but either way he is not confidence inspiring.

Fri, 03/25/2011 - 09:19 | 1099075 savagegoose
savagegoose's picture

wow commy banks  tallking like free market capitalist, and america,,, well doing what it does best.

Fri, 03/25/2011 - 09:45 | 1099167 LawsofPhysics
LawsofPhysics's picture

"free market capitalist" -  Bahahahahahahahahaha, Bahahahahahahaha!!!!!!!


Fri, 03/25/2011 - 09:21 | 1099078 unclebigs
unclebigs's picture

Does this mean I should burn my $ bills and then eat my silver?  This is all so confusing.

 

 

Fri, 03/25/2011 - 09:52 | 1099187 luk427
luk427's picture

Eating your silver might not be a bad idea!   http://thestatedtruth.com/?p=1957

Fri, 03/25/2011 - 09:21 | 1099083 lynnybee
lynnybee's picture

~~ the only people who are going to survive what's coming are those sitting on big piles of gold & silver & food (productive farmland) !!   ~~ one of my friends has started listening to me (finally) & is purchasing extra bags of rice.    & I told him that no matter how difficult he finds the reading, that he is to START reading ZEROHEDGE.    "Wade through it !  Pick a topic that interests you & TRY to figure out what the guys on ZEROHEDGE are talking about !"   ( then, I told him to remember these abbreviations :    TPTB = the powers that be /  TBTF = too big to fail / BTFD = buy the fucking dips!  )  

Fri, 03/25/2011 - 09:31 | 1099117 RafterManFMJ
RafterManFMJ's picture

Be sure to tell him to read the comments. Much info from knowledgeable posters as well as humor.

Fri, 03/25/2011 - 09:31 | 1099123 sagerxx
sagerxx's picture

New acronym:  RFZH.

Fri, 03/25/2011 - 09:52 | 1099199 gwar5
gwar5's picture

I tell friends and most still think things will pick up and get better, like it always has. They don't think the worst can happen. It's simply beyond most of their personal experiences. There are too few people that lived through the Great Depression still around to tell them what can happen. My grandmother lived through the depression and I remember the stories well.

One friend listened and bought SLW and doubled his money in 6 months. Now he's stock piling food just in case.

Fri, 03/25/2011 - 10:16 | 1099274 They_Live
They_Live's picture

I think the whole topic of human pyschology and normalcy bias is a fascinating one.

The EE rely on it to steal from us in plain sight. Is it why kids don't seem to learn history in school today?

Normalcy bias and American Idol, a deadly combination.

Fri, 03/25/2011 - 09:58 | 1099217 falak pema
falak pema's picture

To really enjoy the meaning of rice you have to have slit eyes so sharp you can write a poem on each grain like a blessing for the blind...

Fri, 03/25/2011 - 10:01 | 1099223 falak pema
falak pema's picture

does he need coaching on F***ing or dipping?

Fri, 03/25/2011 - 09:22 | 1099084 99er
99er's picture

EURUSD

Hey, Ben. Speak French?

http://www.zerohedge.com/forum/99er-charts-0

"Merde, alors."

Fri, 03/25/2011 - 09:22 | 1099087 youngman
youngman's picture

no they are going to accumulate gold and silver..and all other commodities also...until they think they have enough to be the "go to guy".....the stable currency for the world...and I think they are not to far off...

Fri, 03/25/2011 - 09:40 | 1099152 Rhodin
Rhodin's picture

After the world gets tired of our (USA) paper and digital coupons, i doubt we'll be wanting to hold paper or digital coupons from China or anybody else, no matter how much gold they supposedly have.  The illusion that paper is wealth, once shattered worldwide, may be impossible to reconstruct.  If there is any sucessful new reserve currency, it is likely to be gold.

Fri, 03/25/2011 - 09:40 | 1099153 luk427
luk427's picture

China is thinking 150 years out. Our retarded Western World politicians are scheming 4 years out.

Fri, 03/25/2011 - 10:03 | 1099228 trav7777
trav7777's picture

maybe in 150 years, those empty cities will be filled up with all the cancer patients from china's toxic air and water.  That's some SERIOUS forward thinking there.

Fri, 03/25/2011 - 10:20 | 1099295 They_Live
They_Live's picture

I'm not entirely certain the premature deaths of its citizens would be seen as a flaw in their long term strategies by the Chinese authorities. 

Fri, 03/25/2011 - 10:24 | 1099308 alien-IQ
alien-IQ's picture

a more likely scenario is that they'll be filled with slave laborers shipped in from America since there will still be no jobs in America in 150 years.

at the entrance of the city there will be a sign that reads: "Remember the Railroads? We do".

Fri, 03/25/2011 - 10:27 | 1099329 Long-John-Silver
Long-John-Silver's picture

Soylent Green farms will take care of that problem.

Fri, 03/25/2011 - 09:58 | 1099216 TWORIVER
TWORIVER's picture

Moody's downgrades multiple Spanish covered bonds

Fri, 03/25/2011 - 09:58 | 1099221 mendigo
mendigo's picture

question, please help

i would think the problem for pm is that pricing is in a parabolic region - the supply is restricted.

so no big player can afford to buy it because the price will move out of reach

if a big player did buy into it, could not sell it because the price would drop thru the floor

if a big player can't buy it it cannot become the basis of global trade

i suspect that on the side, ben and bill own the nominal amount of gold (ca. 20% of assests)

i am new at this

Fri, 03/25/2011 - 10:29 | 1099346 Republican Lackey
Republican Lackey's picture

You opinion is just as valid as the rest of the lemmings on this board.

Fri, 03/25/2011 - 11:53 | 1099799 Rhodin
Rhodin's picture

Nevertheless big players are buying.  They have learned to BTFD, and take smaller bites to avoid spiking it.

Fri, 03/25/2011 - 21:45 | 1101923 hamstercheese
hamstercheese's picture

I don't agree with your comment "if a big player can't buy it it cannot become the basis of global trade" - PM's (precious metals) are a way to cut out the big players because of your comments prior to this one....what we accept as money is what matters...they can buy and take out of circulation all the gold silver, etc...and then you and I will trade rocks..fine....two rocks for a bowl of rice-as long as there is an incentive to farm rice there will be rice, the currency used to transact is whatever is universally accepted and available.

 

 

Fri, 03/25/2011 - 10:10 | 1099261 PulauHantu29
PulauHantu29's picture

 

GLD, SLV, USO and PALL....that's all you need to buy for protection from both inflation or deflation. Even pension plans and insurance companies are now loading up on gold.

Fri, 03/25/2011 - 10:28 | 1099339 Long-John-Silver
Long-John-Silver's picture

Good luck with all that paper stuff

Fri, 03/25/2011 - 10:30 | 1099349 Republican Lackey
Republican Lackey's picture

You mean the paper that gold is priced in?

Fri, 03/25/2011 - 10:48 | 1099436 tmosley
tmosley's picture

Ounces and grams aren't made of paper.

Sure, you can barter paper for gold, but that isn't its value.

Fri, 03/25/2011 - 10:27 | 1099337 Republican Lackey
Republican Lackey's picture

I never realized how easy it is to make lots of money! Just buy PM's.

Fri, 03/25/2011 - 10:53 | 1099464 tmosley
tmosley's picture

Libtroll is a troll, and as such doesn't realize how correct he is.  

Gold: up 31.6% in the last 12 months

Silver: up 126.6% in the last 12 months

Fri, 03/25/2011 - 10:43 | 1099421 SilverBaron
SilverBaron's picture

Forget gold--get aluminum.

Anyone notice how many people are out there on the roads searching for aluminum cans lately?  My friend went to see his long time friend who was in the process of splitting up with his girlfriend.  He said they were arguing over who got to keep the aluminum cans.  He said "I told him to just give her the cans, but he said that's all I've got to eat on until my next unemployment check comes"  He told the guy if you need to eat come over to my house and I'll feed you.  I said he probably can't afford the gas to get to your house and he said that's exactly what he told me.

Fighting over aluminum cans! Reminds me of when my neighbor said he threw down a cigarette with a little left on it in the L.A. county jail and two guys started fighting over it.

Fri, 03/25/2011 - 12:38 | 1100031 Verstehen
Verstehen's picture

must read and exactly what i think (and the Chinese)

http://blogs.telegraph.co.uk/news/peteroborne/100081316/some-european-co...

Sat, 03/26/2011 - 13:11 | 1103117 Tarjan
Tarjan's picture

Walked into a branch of ICBC in Chengdu last year and there are gold bars on display and for sale to anyone. Beijing airport now has a shop selling gold bars, up 1kg size.

Whether government is "pushing" this is besides the point. Gold is readily available to the people.

 

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