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Why China’s Rumored IMF Gold Purchase, If True, Would Be of Huge Significance
A yet to be verified story from Rough & Polished, a
Moscow based website, reported that China had “confirmed its decision to
acquire 191.3 tons of gold auctioned by the International Monetary Fund.” Of
course, until official confirmation comes from China, no one will really know
if this story is true or not. However, if true, here’s why this story would be
hugely significant to the gold market.
One, such a purchase would give more validity to the theory
that China, with a vested interest in the price of gold today, is willing to
intercede and support gold prices whenever they are being attacked by the US
Federal Reserve and Bank of England through their manipulation of fraudulent gold
futures markets in London and New York.
Two, it would further support exposing the gold futures
markets in London and New York as nothing more than a gold fractional reserve playground
that allows the western banking cartel to manipulate gold prices. The last
available Commitment of Traders reports indicated that the Commercials were
short 663.83 metric tonnes of gold. This position is supposed to be fully
deliverable by the Commercials should the offsetting longs ask for delivery. Even
though the Commercials very likely hold some of the offsetting longs through
spread positions, that short position still represents a ton (no pun intended)
of gold – gold, that according to COMEX regulations, must be available for
physical delivery. However, if an incredibly large tonnage of physical (not
paper) gold were really available for purchase on the COMEX, why would China
feel an urgency to take delivery of a mere 191.3 tonnes of gold now through the
IMF? Could it be because India “scooped” them the last time the IMF made a gold
sale and China does not wish to be left twisting in the wind again with very
little physical gold available for delivery in the global futures markets? If
the China IMF gold story were true, the above would be plausible reasons for
China acting now rather than later.
Remember, last week in my article, “IMF Gold Sales v. the
Alchemy of Gold Futures”, I stated,
"If you were India, China or the United
Arab Emirates and you wanted to buy 200 tonnes of gold at the price established
in futures markets, but you knew that there was no possible situation whereby
200 tonnes of gold would ever be delivered to you via the futures markets, what
would you do? Would you buy 200 tonnes of gold in the futures markets only to
know that you would suffer a default of this delivery and likely be forced to
pay a much higher price in the future or would you try to arrange to buy 200
tonnes of gold NOW from the IMF or another Central Bank? Of course, you would
choose the latter tactic.”
If it turns out that this story is true, then
apparently the Chinese government agrees with me. Also remember that China, as
the world’s largest producer of gold, is likely to keep the vast majority of
its future gold production in house. Thus if China is still turning to the
outside market to buy its gold to buttress its gold reserves in addition to its
internal production, then this story is very bullish for the long-term future
of gold.
Three, if this story is later confirmed to be true, only an
inside Chinese source could have leaked this story. No inside source would have
leaked this story unless the deal had already been sealed as such pre-sale
information would be very detrimental to China as it would lead to a higher purchase price.
If this story is true, this again, leads credence to the theories that China
now serves as a very important counter to the gold price suppression schemes of
the western banking cartel. Remember, as recently as five years ago, the
western banking cartel essentially faced ZERO opposition to its price
suppression schemes in gold and silver. Thus, the emergence of a powerful
opposition force would be a huge development to the gold market.
Finally, if this story were confirmed, then this event would
likely allow gold as well as mining stocks to form a bottom in preparation for
a move higher. Though the agents of the western banking cartel always like to
paint gold supporters as a fringe lunatic movement that perpetually believe
gold is heading to $10,000 an ounce tomorrow, this is the furthest possible representation
of reality. I have always found supporters of gold to be among the most well
informed people in the world in regard to understanding how stock market and
futures manipulation schemes operate versus those that remain blind to this
reality.
To dispel the notion that gold supporters never recognize and
play the downside of rapid downward corrections in precious metal, on February
22nd, more than 10 hours before New York markets opened, I sent an alert to my
subscribers in which I stated,
“Even if gold futures rise as high as $30 a day
in Asia today [gold futures were up $9 an ounce at the time in Asia], a selloff
in London and New York today or tomorrow [February 22& 23, 2010], given the
action in gold futures and gold stocks last week, would still not surprise me
one bit. Of course, if this happens, and I think it is likely to happen, then
we could see some more weakness in gold stocks to begin this week before they
resume their rise.”
And this is exactly what has happened thus far. Though we
are not yet out of the woods in terms of this current gold and silver
correction, the China story, if confirmed, could be the trigger to put in the
bottom of this current correction.
Of course, if this story later turns out to be unfounded,
then it may trigger a continued temporary, albeit likely brief, further slide
in gold prices. In conclusion, though on the surface China’s yet to be
confirmed purchase of gold from the IMF seems to be just a passing note
unworthy of attention, if it turns out to be true, we may very well look back
at this event as marking a crucial turning point in the gold market.
About the author: JS Kim is the managing director of a niche, wealth consultancy group that offers investors investment strategies designed to beat the fraud of Wall Street and transfer wealth back to Main Street.
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The fuss.. is about so-called Big money, y'know, the FED, the Sovereigns, Oil, Defense, Pharma, being good for absolutely fucking nothing. They write wars, technology, keep the rest of us as poor slaves. Read our mail, do whatever they fuck they want to us. ...they are the fucking plague.
Sadly enough, I trust the Chinese government more than my USA Government.
China (or other) will buy the gold inbetween March 4th and March 17th. The price will be $1125.
List of other suitors; 1) The House of Saud 2) Brazil 3) Germany 4) Canada 5) Russia 6) Japan-my wildcard
Five Billion or so United States' Dollars?
This is what the big fuss is about?
well, yeah. it is a game of monopoly, and china is buying a hotel.
These large countries are working together not against each other, it isn't as the media portrays it . Of course it doesn't mean they agree with everything just the big picture.
the paper gold price is meaningless.....the physical price is 25% higher than paper....comex and lbma have made physical delivery harder to do than getting the government to admit that it murdered martin luther king, jr. or obama to show us his vault copy birth certificate.
www.obamacrimes.com
The physical price is only 25% higher when you get down to 1/20 ozt fractions and smaller.
Then why do North American gold companies blindly and in pure lemming fashion willfully abide by the comex listed price. They're selling the real mccoy, should they not be able to fetch a 25% premium to the comex listed prices if this was the case?
I'm accumulating as I'm able to afford it, and there's a premium in the price of Gold Eagle coins above spot price. Right now I can buy a 1 Oz coin for $1,188 at Americansilvereagle.com.
China is buying gold for one reason - because the rest of the world is completely full of shit.
One step closer to check-mate.
+1000
The Fiat system is coming crashing down. When the rest of the PIIGS collapse and the euro or pound dies how happy will those Europeans who have 10 to 25% of there assets in gold be. When the world finally gets sick of the Gietner/Bernake serial abuse of the dollar and the IMF forms a new world currency how much will your FRN's compare to an ounce of Gold for a trade in.
http://abcnews.go.com/Business/wireStory?id=9958995
Abc news IMF head calls for new currency
So why is, according to the recent article officially released by China denying the purchase, that "China was not a 'realistic candidate' for a purchase of bullion?" Is there some rules from the IMF (US Federal Reserve in drag) about who can be a candidate?
Yea well you guys believe what you want. No You can't walk in to a grocery store and buy anything with gold except maybe in Alaska. I have a little shy of 8 pounds of gold dust and nuggets I dredged up in Oregon 20 years ago over a two year time frame. I got it in a safe deposit box at my local bank, where my greedy assed banker can look at it sparkle and run his slimy little fingers through it when I am not around. You should hear that suck ass when I come in. He will loan me any amount of money I ask for and I don't have to wait for a board to approve shit.
Believe it or not most of the eight pounds was found in one day. Me and my partner could not figure out how come our chickenshit little dredge would not stay floating. Finally cleaned it out and had about 7 pounds of dust and fines sinking it down. I sold my tiny little 3 bedroom house frame house and gave my partner Earl 15,000 for his share of the gold (back then spot gold was around $300. Earl bought himself a brand new pickup and stayed drunk for two years. Today he lives in Wyoming and works construction jobs and is usually broke. If Earl would have put his fiat in the bank at about 4% average he would probably have about 40,000 today.
He could not even by the tiny house I sold then. That tiny house I sold I would have paid about 10000 minimum in taxes over the next twenty years. If I would Have kept the 15000 its buying power today would be worth about 2500 today assuming no interest was earned. Today I could send the eight pounds to a refiner and they would give me about 85% in fiat money after they high graded me a few ounces for the the service. My 15000 dollar purchase today is worth about 160000 or about %1100 in 20 years. I probaly will never sell it as its collateral value and appreciation is work way more that an inflated fiat piece of shit paper from any country.
Hmmm why not dig deeper or better yet a new " conspiracy theory " ... China buys Xau from IMF, enabling IMF to use funds to bail out Greece ? With the recent revelations that China either allowed 30 bio of US Treasuries to " roll off " or sold them , leaving Japan as number the #1 lender to US. This allows China even greater diversification of their reserves as they buy Eur and take down a large portion of the soon to be Greek auction ? With that in mind, certainly it would quiet Chuck Schumer and co. about strong CNY and as well potentially allow China a greater voice internationally with quasi - aid to ailing Western Europe ? ...just saying
Well, Physical gold may not be worth crap at a grocery store. I have a little shy of 8 lbs of natural gold dust and nuggets I dredged up in 2 years in Oregon. Its in a safe deposit box at my local bank. Right there so my greedy ass banker can look at it sparkle every day and run his fingers through it. He will loan me any amount of money I ask for and I don't have wait for the board to approve shit.
@anon, got any pics???
I live on the oregon coast and have failed to find any gold so far. From Coos bay up to astoria has all been a dead end. Most of the finds are in eastern oregon.
But all the long walks have done me good and showed me the greatest value is to be alive and healthy
Still looking with pan, sluice box and metal detector. Loving it for the adventure.
You either are one SUPER wealthy dude, or foolish beyond belief.
NO WAY, you keep PM's, or anything of real WEALTH is a SD Box.
Never....................unless you have it insured.(what would that sit you back?).
Gv't closures,Gv't seizures, and Banker theft......SD Boxes are cleaned out all the time, and not by the owners.
And, unless it's recorded and insured your screwed.
In a SAFE DEPOSIT BOX???
Seriously Dude, it is not safe there. You need to google "Safety Deposit Boxes" to realize that if anything you have in one mysteriously disappears, you are S.O.L.!!
No insurance against any kind of loss!!
It appears that Brazil, China, India and Russia intentions to have real gold will, at some point in a future, lead to a collapse of "paper" gold as well as a substantial reduction in a value of US$ as the reserve currency.
"the China Gold Association official said China would boost its reserves through investments in overseas mines." Well, this is even more interesting. I like it.
PS
Do I trust Chinese government? Certainly. They like the US government and FED would never lie.
We're all entitled to out own opinion. Let's see how events unfold.
I would comment though, that you are confusing the concepts of money as a store of value and money as a medium of exchange. Paper money fulfils the latter function extremely well, but the great deception underlying our pure fiat system is that people have been misled to believe that it can also do the former.
I contend that walking into a shop with a 400oz bar of gold to purchase goods, is about as ridiculous as trying to store wealth accumulated over many years in the form of paper, or electronic bits, both of which can be created on demand for "Essentially no cost" as Mr Bernanke once put it.
"...according to COMEX regulations, must be available for physical delivery."
I have sifted through the regs on several occasions frustratingly trying to find discussion of the obligations for sellers regarding their ability to fulfill delivery of the contracted commodity.
There seems to be plenty to say about buyers posting collateral, and margin rules, and work out procedures for defaults, etc.
However, I simply have never found the place(s) where it talks about what a seller must do or provide, in terms of possession of the underlying, in order to sell a contract.
Can someone cite for me chapter and verse? Many, many thanks in advance!
Chine like every good trader pretends lack of interest.
Off course they will buy.
Sorry to say, but that rumor's been scotched officially:
http://www.chinaeconomicreview.com/dailybriefing/2010_02_26/Official:_China_will_not_buy_IMF_gold.html
The Russian author of the story claiming that they would, had no source except rumors.
"an official at the China Gold Association"? I guess that's official, then..
You are probably correct.
BUT rumors such as this are the favored method by which sovereign nations and increasingly corporations test the waters to see how such an "official" confirmation might go over. It's also the best way to condition the population to a coming event. The mind sees it as old news the second time it's received, regardless of whether the second time is "official" and the first time was rumor.
We must always remember that we're constantly under psychological assault, the so called Psyops. We are played like a chess game, where the real action begins 8 moves deeper than where we are now. If you're not aware of the manipulation, you're just Play-Doh in their hands.
http://www.hasbro.com/playdoh/en_US/
http://en.wikipedia.org/wiki/Psyops
CD,
While I have read, and largely appreciate your appeals and acceptance within the ZH community. To be succicnt, you really have never explored the fact that, maybe, you aren't specifically under "psychological assault"?
Really, and I'm being serious, has there EVER been a time where ANYONE has not been the subject of "psycholocigal assault"? Ever?
10/4, trial balloons...........
Yeah, 'cos large buyers never put out denials and misinformation to get a better price. CoughSorosCough!
If there is at least one big buyer of gold in the market, there should be physical shortage of metal on the wholesale level.
Nobody admits a shortage, but has anybody tried to buy wholesale and take delivery?
Unfortunately I do not have the needed change to check it myself by buying some 400 oz bars and take delivery.
I read a lot of opinion but little facts on this one.
You must not know anyone in russia. Plenty of gold available, and even more if you want to partner up for 'the long term'.
That's the shame of this website, always latching onto 'conspiracies' gone past and never looking at the 'conspiracies' about to come.
Just sayin... Free markets do win over time.
Gunther,
Did you read the Adrian Dougle report today entitled "Alarming trend in Comex gold and silver inventory data"? It speaks to certain trends that may point to what you are alluding to. There is a link to the PDF on the GATA site on the home page.
Duffminster
Duffminster,
thank you for the info.
Adrian Douglas' observation is in line with a "physical buyer hypothesis."
Anon, if the Chinese buy the IMF gold off market, it would not show in the market.
But if they or somebody else with deep pockets buys metal from an exchange or directly from a miner that would show in the market.
Edit:
D.M. Ryan,
the link you provide could be understand that the Chinese buy gold miners to accumulate gold.
Pay the mining expenses in Dollars and bring the output into China.
But the IMF is not the Market. If they sell to China, it is one central bank selling to another. That doesn't affect supply the gold on the open market. I'm with you on reliability of COMEX and taking delivery, but Central banks moving gold around has nothing to do with that.
All of this assumes that China is not going to just turn straight back around and do the same thing: writing paper against its new physical gold.
Ever consider that they see the game being played and just want in on it?
If Reds had a half brain,(and they do) they would snag this off a private negotiated deal( which is the way they said it WOULD be done, IF they were to purchase it later), using dumped US Treasuries.........
I still have yet to understand why they transferred 35 Billion of the UST's to Shanghi?.
What did that accomplish............
Supposedly China bought at a price of $1050 from the IMF.
So please explain why China would want to pay $50-70+ more per oz, for 7 million ounces, by going the open market route?
Why would China buy gold at over $1000/ounce when
it can produce it at about $300-500?