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China Plans Massive 1,500 Tonne Gold Storage Vault

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Today’s AM fix was USD 1,320.75, EUR 963.63 and GBP 792.20 per ounce.
Yesterday’s AM fix was USD 1,313.75, EUR 959.22 and GBP 788.90 per ounce.   

Gold rose $13.50 or 1.03% yesterday to $1,323.70/oz. Silver climbed $0.39 or 1.82% at $21.83/oz.

Gold is marginally lower today but is 0.3% higher for the week. A higher weekly close today will be the third week of consecutive gains which would be bullish from a momentum and technical perspective.


Gold in U.S. Dollars - 5 Day - (Bloomberg)

Concerns about emerging markets including China, the U.S. economy and worries about global economic growth are underpinning gold's safe haven appeal. This has led to the 6% gains in February and the 9% gains so far in 2014. Yet prices are 45% below the nominal record high of  $1,915 an ounce reached in 2011.

Investment and store of wealth physical demand is underpinning prices and led to gold reaching 3 month highs of $1,332.45/oz last Tuesday.

Premiums for gold bars in Singapore were steady as they were in Hong Kong, but fell in Tokyo because of sharp gains of gold in yen terms.  Premiums for gold bars in Singapore were little changed at $1.20 to $1.50; Hong Kong premiums were at $1.30 to $1.70 according to Reuters.

The most active December gold contract on the Tokyo Commodity Exchange rose 43 yen/gram to 4,346 yen, within sight of a five-month high of 4,366 yen/gram hit on Tuesday on the back of a weakening yen.


Gold in Japanese Yen, 5 Years - (Bloomberg)

The technicals suggest that after a pullback, the precious metal may continue to rise. A period of correction and consolidation would ordinarily be expected after such rapid gains. The question is - do we see it now or after further gains?

If gold closes lower today and for the week, it would be bearish in the short term as follow through technical selling would be expected. A higher weekly close should lead to more gains next week.

To sum up, gold is vulnerable after the recent sharp gains. In the short term, technicals and momentum may dictate, rather than the positive fundamentals.

Gold traders and analysts are divided on the outlook for gold next week. The weekly Bloomberg gold survey shows that 14 are bullish, 15 are bearish and 4 are hold.


Gold in U.S. Dollars, 5 Years - (Bloomberg)

Last week reports showed retail sales and factory output unexpectedly fell in January and housing starts slumped causing renewed concerns about the U.S. housing market. The anemic economic recovery in the U.S. is very dependent on the fragile U.S. housing recovery.

Macquarie analysts said in a report this week that the annual gold demand figures for 2013 may signal a ‘mystery buyer.’ The World Gold Council’s ‘Gold Demand Trends’ report released Tuesday showed OTC investment, stock flows of 595 tonnes in 2013, with 317 tonnes in Q4, plus “excessive” Chinese gold imports. This “has given rise to much market speculation about a ‘mystery buyer’ of gold in 2013,” Macquarie said in a report picked up on by Bloomberg.

OTC investment demand includes opening of gold deposit accounts and other gold-backed products, especially in Turkey and China. Macquarie estimated stock build in China of about 300 tonnes. The WGC “did not rule out the possibility that some of the unknown demand was caused by unidentified central bank buying.”

The People’s Bank of China’s (PBOC) stealth gold reserve diversification programme likely continues.


IMF Gold Reserves - U.S., China, Germany and Russia (Bloomberg)

Russian gold buying slowed down in January. Russian January gold holdings were unchanged at 33.3 million troy ounces. The Russian gold reserves are valued at $41.7 billion as of the end of January versus $40.0 billion as of the end of December, the Russian central bank reported on its website.

The Chinese Gold & Silver Exchange Society is prepared to spend at least HK$ 1 billion to set up a gold vaulting warehouse in mainland China that will be able to store a massive 1,500 tonnes of gold.

President Haywood Cheung Tak-hay told the South China Morning Post of the development. Society members, who include all gold jewellery makers and jewellery and bullion retailers in Hong Kong, support the planned project in Qianhai.

A key issue, Cheung said, is for the warehouse to be given special status by Beijing so members can freely transfer gold and silver between Hong Kong and Qianhai. China still has capital controls and only 11 mainland banks are allowed to import gold.

Qianhai, about an hour by car from Hong Kong, was named in July 2012 as a testing ground for the free flow of yuan and other policies to encourage overseas investment. "At present, many foreign gold investors dare not trade in China as there are too many restrictions. They prefer to trade in Hong Kong which is a free market. If we can have a Qianhai warehouse, it would further increase our attractiveness," said Cheung.

The 7 Key Allocated Gold Storage Must Haves
A diversification into gold remains prudent and will again protect investors, both retail and institutional, pensions owners and savers, over the medium and long term. However, this is only the case if the gold owned is physical bullion coins and bars and not digital gold, pooled gold or paper gold. Fully segregated and fully allocated gold coin and bar storage remains the safest way to own gold.
 
There are a number of key storage must haves and we have compiled the absolute benchmark allocated gold storage list that will enable those seeking an allocation to physical gold to evaluate potential bullion and more importantly storage partners.

The 7 Key Allocated Gold Storage Must Haves

1. Ability to take delivery: Ensure that can you take delivery of your bullion when you want and where you want
2. Bullion authenticity: Ensure your gold bullion is produced and stored within the LBMA chain of integrity
3. Gold bullion audits: Ensure your bullion is audited daily, and annually by internationally recognised auditors
4. On-Line storage inventory: Ensure that you can log-on to view your bullion item description for bars or coins, quantity, gross weight, fineness and item value
5. Being able to visit and view holdings: Ensure that you can arrange to visit and view your physical gold coins and bars
6. Insurance of bullion at storage facilities: Ensure that your bullion provider and its storage partners have adequate insurance cover
7. Guarantee of bailment: Ensure that the legal ownership of the bullion remains with you

Conclusion
Guarantee of bailment is potentially the most important point. In the event that the company you store your bullion with is nationalised - insolvent governments are known to nationalise companies of a strategic value -  or goes into liquidation, your gold could be forfeited.

Some gold services offer ultra cheap storage, in many cases below the actual vaulting costs of ownership. This means that the storage rate you are getting is being subsidised by some other revenue stream, such as interest on currency deposits or possibly profits from speculation. If this is the case your bullion may be at risk. When choosing your provider steer away from the deep discounters and seek quality, otherwise, may then get exactly what you paid for in terms of access.

Thus owning gold directly and in a fully allocated and fully segregated account remains vital.   

Download your copy of 7 Key Allocated Gold Storage Must Haves here.

 

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Sat, 02/22/2014 - 10:11 | 4464775 Son of Loki
Son of Loki's picture

Open vault find 'Rehypothecation Certificate' inside.

Fri, 02/21/2014 - 23:52 | 4464258 Binko
Binko's picture

Roughly speaking 1500 tons is 3 million lbs which is 36 million ounces (off the top of my head, isn't it 12 troy ounces to the lb?) which, at $1500 an oz totals out to something like $44 billion?

Sounds like a lot. But what is that? Less than one month of Fed printing? Or two weeks of China Central Bank debt creation?

The central banks in all big countries are spitting out such monumental amounts of debt creation that gold is just a sideshow.

Sat, 02/22/2014 - 09:17 | 4464715 d edwards
d edwards's picture

Very interesting: while other nations have been INCREASING the fiat supply and DECREASING their gold stores China is stocking up.

BTW, if the US has all those tons of gold (supposedly) how can our country be "bankrupt? IMHO it ain't there.

Fri, 02/21/2014 - 22:26 | 4464046 dexter_morgan
dexter_morgan's picture

All that for an ancient worthless relic to be sewn in your clothes.

Fri, 02/21/2014 - 19:45 | 4463643 SubjectivObject
SubjectivObject's picture

Attention! 

We regret to inform you that a zero has gone missing.

Readers are urged please to report finding any lost zeros.

Fri, 02/21/2014 - 18:14 | 4463387 Colonel Klink
Colonel Klink's picture

A massive 1500 tons?  That's like what, the size of an average size 2 car garage?

Sat, 02/22/2014 - 02:17 | 4464491 bonin006
bonin006's picture

Your guess, if that's what it is, is very close. I just calculated 3,000,000 Lb of gold to be a cube 13.6 ft on a side.

Fri, 02/21/2014 - 15:22 | 4462759 walküre
walküre's picture

Ghost vault.

After all we know about China, why are people so hell bent on believing the Chinese are actually in the possession of all this PHYS when we know the Fed says the same but is lying?

They're all lying and embellishing. China is building ghost towns, ghost coal power plants (trust funds imploding) and ghost malls. But surely, China is building vaults to hold the gold they say they have? Gimme a break.

Fri, 02/21/2014 - 19:17 | 4463552 fijisailor
fijisailor's picture

We know the Chinese are not lying because the Swiss say they are not and are casting the 1 oz bars that are being sent to China.  With statements like yours it is clear that you have not been keeping track of what has been going on with gold over the past few years.  It's never to late to educate yourself.

Fri, 02/21/2014 - 20:16 | 4463737 walküre
walküre's picture

Gold has the longest reputation as a store of value but also the longest history of rumors, temptation, falsehoods and corruption.

Who knows why the Swiss are saying what? It takes supposedly 7 years from the date of the original request to completition for Germany's gold to be delivered back to Germany. Sounds like a good story and allows for so much mystery, intrigue and speculation as to whether the gold is really there or whether the intention is to really send the gold back.

When it comes to gold stories, you're best advised to take everything with a very fine grain of salt.

Fri, 02/21/2014 - 20:32 | 4463779 fijisailor
fijisailor's picture

And according to the Chinese 247 tons in January.

http://www.ingoldwetrust.ch/january-chinese-gold-demand-all-time-record-...

And what do you have to offer contrary to this?  Anything besides your feelings?

Sat, 02/22/2014 - 12:32 | 4465130 walküre
walküre's picture

Chinese are buying luxury items which has been a boost to luxury car makers and so on. Naturally they're interested in buying more gold. Are they getting gold or tungsten? I wouldn't want to speculate.

The problem with China is that nobody knows what they're up to and far more challenging is the question, how do the Chinese pay for all these items they're buying en masse. They're buying properties around the world, entire businesses including IP, mines, deposits, cars, houses you name it. Everyone, not just us Americans is wondering where the hell do they get this money from? Spoke with Koreans last week and the topic came up. There is no conclusive answer. It cannot be legit is what we all concluded. Koreans know Chinese history quite well and they wouldn't trust anything reported from China, especially nothing in terms of financial health. They're making it up and how do we know they're not just printing the snot out of their Mao paper to buy everything in the world. Using their network of family operatives to engage as buyers flush with cash.

Ok, so they're building gold vaults. They've built ghost malls and ghost towns. They've built a fleet of ghost ships and built just about anything they have no actual use for just because it's part of a plan to employ people and churn through infinite amounts of cash / credit (who cares?) and burn up resources. The accounting allows them to list the GHOST XYZ as an asset and print more.

I do believe that the Fed, the BoJ and ECB and their governments are realizing this now which is why immigration rules are being reviewed and foreign purchases are getting more scrutiny.

Chinese are masters of deception and fireworks. There's no glory and honor in faking just about everything to try and beat the West at its own game.

Fri, 02/21/2014 - 20:26 | 4463763 fijisailor
fijisailor's picture

Wednesday I had the privilege again to interview Alex Stanczyk, Chief Market Strategist for the Anglo Far- East group of companies, who just returned from a trip to Switzerland. Alex confirmed to me the distribution of gold from west to east is not slowing down whatsoever. Refineries in Switzerland are still working 24 hour a day to cast bars for China, sometimes having difficulties sourcing the gold..

 

What was the purpose of your trip to Switzerland?

 

The purpose was two fold. We go to Switzerland once a year as part of our governance, we’re required to have an annual inspection of the gold, that was the main purpose of the trip. But in addition to that we also liked to talk to the refineries. It was myself, it was the managing director of Anglo Far-East mister Philip Judge, and Jim Rickards went with us, he sits on our advisory board.

 

We met with the managing director of the largest refinery in Switzerland and spend about two hours talking to him, we learned some very interesting things. Whats going on in the gold market as far as the price, is I think very counter intuitive. Everybody understands, knows and believes the price should be higher than it is, but it isn’t. There’s confusion in the marketplace, and there are two reactions; the reaction in the west is fear, confusion and uncertainty; the reaction in the east is buying. Now, this gentleman we were talking to probably has a better idea of physical gold flow than anybody else globally. He sees what is coming from the mines, he sees what is coming from the UK, and all over the world, as well as where its going. He indicated the price didn’t make sense because he has got so much fabrication demand. They put on three shifts, they’re working 24 hours a day, and originally he thought that would wind down at some point. Well, they’ve been doing it all year. Every time he thinks its going to slow down, he gets more orders, more orders, more orders. They have expanded the plant to where it almost doubles their capacity. 70 % of their kilobar fabrication is going to China, at apace of 10 tons a week. That’s from one refinery, now remember there are 4 of these big ones [refineries] in Switzerland. 

 

That makes sense because withdraws from the Shanghai Gold Exchange vaults are 40 tons a week on average this year.

Fri, 02/21/2014 - 19:56 | 4463670 cynicalskeptic
cynicalskeptic's picture

1 KILO .999 fine  bars that are going to China... the Chinese could care less about archaic English measurements like troy ounces.   The side effect of resmelting into 1 kilo bars (and refining to .999 purity) is that these once London Good Delivery standard bars are 'removed' from the western PM trading system.    But then it's not like the gold going to China was coming back to the west any time soon.

I wonder if - eventually - when the west wakes up they'll try a replay of the Opium Wars to get their gold back.  After all it worked for Britain when their silver reserves were being drained to pay for Chinese tea porcelain and silk....   get the Chinese addicted to Indian opium - and insure availability - at the end of gun.     Not sure the Chiese would allow that today though - and what else does the west have that China wants?   Wew GAVE them our indistrial base and God knows how many technology sharing agreements have been signed......   what's left?     Do the Chinese have a thing for busty blondes (like certain Arab prines)? 

Fri, 02/21/2014 - 20:09 | 4463717 fijisailor
fijisailor's picture

My bad.  I'm so stuck on ozs that I neglected that.

Sat, 02/22/2014 - 02:23 | 4464496 theliberalliberal
theliberalliberal's picture

i thought they were 0.9999 not 0.999

 

even perth mint has stopped making three 9's

Fri, 02/21/2014 - 17:38 | 4463282 Volaille de Bresse
Volaille de Bresse's picture

"after all we know about China, why are people so hell bent on believing the Chinese are actually in the possession of all this PHYS when we know the Fed says the same but is lying?"

 

Because the Chinese paly mah-jong and the US play poker. Poker involves lying and bullshitting the opponent, sth Washington has been doing with rest of the world since Nixon. 

Mah-jong is a delicate game where you surround and choke your opponent and you force him to surrender. The publicity around this vault is one of many attempt by China to surround and choke the US. 

"after all we know about China, why are people so hell bent on believing the Chinese are actually in the possession of all this PHYS when we know the Fed says the same but is lying?" is misunderstanding the facts. The Chinese don't play poker = they don't bluff by letting others think they're bigger than they really are, they're slowly strangling the US. 

Fri, 02/21/2014 - 21:10 | 4463857 Apostate2
Apostate2's picture

I think you mean Go (weiqi) not Mahjong (majiang). Mahjong is like rummy but Go is a strategic/encircling game.

There is no doubt the Chinese are buying and mining gold at record rates. In Hubei recently several illegal gold mines were shut down. These activities started about a year ago by the enterprising locals.

 

Fri, 02/21/2014 - 17:58 | 4463345 walküre
walküre's picture

Mah Jong my ass bullshit, they're all just cooking with water. Chinese have been counterfeiting currency like crazy, have used their operatives to buy up companies and real estate across the globe with the cash from unqualfied origins. That's the only thing the Chinese have done and are good at. Pumping worthless shit out the ying yang (pun intended) and pretending they're fighting corruption and really have a transparent government and banks. It's all bullshit and unfortunately the greed in the West has killed about all precaution. Maybe that's Mah Jong, I call it a fabrication, complete and utter manipulation of everything, lies, lies and more lies.

At least poker is typically played with one deck of cards. The Chinese are not only playing with multiple decks, cards in their sleeves and a couple extra Aces in every deck.

Fuck Mah Jong me.

Fri, 02/21/2014 - 15:11 | 4462719 Sufiy
Sufiy's picture


Rick Rule On Gold And Silver Markets, Miners And Silver Short Positions


Rick Rule gave a very interesting interview on Gold and Silver markets and, particularly, on Gold and Silver mining stocks. Learn from the pro about the investment landscape unfolding this year. Rick Rule was right on the money with his call on the bottom in junior miners last summer. Now he is talking about the Silver short positions being literally uncoverable with the inflow of 2 billion dollars. "The bear markets are the very authors of the Bull market. Recovery in the best Gold and Silver mining stocks will match the magnitude of the previous bear market decline."   Companies like McEwen Mining, Royal Gold and Silver Wheaton have already demonstrated the explosive leverage to the rising Gold and Silver prices. http://sufiy.blogspot.co.uk/2014/02/rick-rule-on-gold-and-silver-markets...

Fri, 02/21/2014 - 15:03 | 4462690 lasvegaspersona
lasvegaspersona's picture

8. Know how to use a GPS and shovel

9. federal land is unlikely to undergo unexpected development (bulldozers)

10. Hidden floor safes can be installed in hours with appropriate tools.

11. Why trust someone else when you can DIY?

12 Gardening at midnight can have high yield results. Nosey neighbors should be avoided.

13 Multiple locations decrease the likelihood of loss but increase the probability of detection.

14. Why use allocated accounts when you can take care of business yourself? If you are dealing in tons instead of ounces ignore the above.

Fri, 02/21/2014 - 16:27 | 4462963 The Wisp
The Wisp's picture

A GPS is technologically dependent.. always have a back up method.  during war or disturbance first thing they will shut off will be the civilian GPS system

Fri, 02/21/2014 - 14:36 | 4462600 Save_America1st
Save_America1st's picture

Silver just exploded towards 22...I wonder what happened now?  Did the monkeys fall asleep at the hammer button???

Fri, 02/21/2014 - 16:10 | 4462909 Bastiat
Bastiat's picture

I guess the klaxons woke them up.

Fri, 02/21/2014 - 14:33 | 4462589 are we there yet
are we there yet's picture

To save money, China could rent out the unsued space at Fort Knox.

Fri, 02/21/2014 - 14:46 | 4462631 unplugged
unplugged's picture

they did this already by buying JPM headquarters and the huge empty vault under it

Fri, 02/21/2014 - 17:05 | 4463123 are we there yet
are we there yet's picture

I wonder if any part of the White house has not been bought off yet. If not, we could have J.P.Morgan sell futures on the White House in a White House hedge fund.

Fri, 02/21/2014 - 14:31 | 4462585 buttmint
buttmint's picture

fill vault with pork bellies?

Fri, 02/21/2014 - 14:29 | 4462574 kchrisc
kchrisc's picture

Will it have a tunnel to the NY Fed too?!

 

"Digging a hole to China or just a grave?!"

Fri, 02/21/2014 - 14:29 | 4462571 cashtoash
cashtoash's picture

I hear they have a lot of unoccupied homes and even cities where gold can be stored.  It will be secure too because nobody goes there

Fri, 02/21/2014 - 14:21 | 4462541 Winston of Oceania
Winston of Oceania's picture

Great more vaults for banksters/gub'ments to pretend they have gold in. Care to wager they won't let you inside to look around? Vaults are for the oligarchy to hide in when they kill off the excess population, what with all the automation and robotics coming on line. I can see it now, Six Billion Blossoms, "tell us what can we do to improve your government"... Of course that phrase doesn't mean "your government" in the sense you think, it means your general management as a COMMODITY because you are not even as profitable as cattle until you get your mind right. Marx took his work to the oligarchy for a reason, it is nothing more than the management OF the masses under the delusion of "for the people".

Fri, 02/21/2014 - 14:20 | 4462540 silverserfer
silverserfer's picture

allocated gold storage is for fags.

Fri, 02/21/2014 - 14:18 | 4462527 RafterManFMJ
RafterManFMJ's picture

No tickee, no goldee. Slo slorry, round-eye. You go now!

Fri, 02/21/2014 - 14:28 | 4462568 Hongcha
Hongcha's picture

RafterMan, they have done a pretty good job gutting our jobs, our gold and scooping up our RRE assets in prime locations.

This vault is like the pineal gland of their financial brain.  They want to be the dominant asian currency.

Fri, 02/21/2014 - 14:17 | 4462526 Conax
Conax's picture

Good, that'll hold December's haul..

Going to need a bigger box.

Fri, 02/21/2014 - 14:13 | 4462512 Save_America1st
Save_America1st's picture

Shit, they'll need at least 15 to 20 more vaults like that by the time they're done stackin' and packin'. 

Fri, 02/21/2014 - 14:10 | 4462499 stant
stant's picture

pity theres one in ky thats not being used now

Fri, 02/21/2014 - 22:03 | 4463978 Mad Muppet
Mad Muppet's picture

Hey! Maybe we can call their embassy and offer to hold some of their gold there for them. They save money on construction costs, and their archaic barbaric relics are safe and secure, right here in the good 'ol USA. Trust us.

Fri, 02/21/2014 - 14:04 | 4462473 gann1212
gann1212's picture

im sure if i need to get my hands on it it will be no problem

Fri, 02/21/2014 - 14:01 | 4462459 Bagbalm
Bagbalm's picture

I'm going to trust my gold to people I can't trust not to poison my dog to save a nickle?

Fri, 02/21/2014 - 14:56 | 4462668 RaceToTheBottom
RaceToTheBottom's picture

People are close to that desperate because the FEDs of the world have taken away most all other alternatives to "investing"

Fri, 02/21/2014 - 17:36 | 4463272 zaphod
zaphod's picture

I still would trust my gold to the FED and/or Fort Knox than a vault operated by the chinese government. 

Say what we will about the west and how our elites are robbing us blind, but the level of corruption by government officials is a bit worse over there.

Sat, 02/22/2014 - 06:12 | 4464625 effendi
effendi's picture

That is like saying you trust the mafia more than the yakuza.

 

Sat, 02/22/2014 - 10:05 | 4464768 Son of Loki
Son of Loki's picture

in merika they just put a gold certificate piece of paper in the drawer. no vaults needed for paper.

Fri, 02/21/2014 - 11:21 | 4461828 new game
new game's picture

a vault every five days!

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