LBMA Chairman Says Chinese Gold Allocation To Rise

Tyler Durden's picture

From GoldCore Gold Bullion

LBMA: Chairman Says Chinese Gold Allocation To Rise; SGE To Launch Interbank Market

Today’s AM fix was USD 1,735.75, EUR 1,365.44, and GBP 1,091.39 per ounce. 
Friday’s AM fix was USD 1,732.75, EUR 1,362.23, and GBP 1,085.55 per ounce.

Silver is trading at $32.65/oz, €25.80/oz and £20.65/oz. Platinum is trading at $1,570.00/oz, palladium at $610.60/oz and rhodium at $1,090/oz.

Gold Price Fixes/Rates Volumes – (Bloomberg)

Gold fell $1.80 or 0.10% in New York on Friday and closed at $1,731.00. Silver hit a low of $32.057 and a high of $32.775 but finished with a gain of 0.46%.

Gold is 0.25% higher this morning after posting the biggest weekly gain (+3.3%) since late August on safe haven buying driven by worries about the U.S. fiscal cliff and economy.

President Obama is meeting with leaders this week and is expected to speak on the subject on Wednesday. $600 billion in tax increases and budget cuts are set to start in January which is making markets nervous and leading to diversification into gold.

Gold and especially silver buying in India has been robust for the Indian Dhanteras festival.

The Times of India reports that high prices have “done little to mar the spirit of buyers who are splurging on the yellow metal like never before. In fact, people were seen queuing up in jewellery shops across the city to buy gold, silver and other precious metals.”

White, not yellow, was the preference this Dhanteras and there was “big buys of silver on strong festive demand.” Dhanteras, the 13th day of the Hindu calendar month of Ashwin, is considered auspicious to buy precious metals.

The London Bullion Market Association (LBMA) gold conference has begun in Hong Kong and already there have been important stories with ramifications for the gold, currency and wider markets. 

There is a real possibility of market moving stories coming from the gold industries leading conference. 

News that China will inevitably increase central bank purchases of gold for its reserves was highlighted by the LBMA Chairman in Hong Kong.

Chairman of the LBMA David Gornall told the conference, “When comparing China to the U.S., it would seem that in China, gold asset allocation can only go in one direction.  The country has only 2% of its reserves in the form of gold compared with the U.S. at 75%.”

The People’s Bank of China hasn’t disclosed any changes to its gold holdings since 2009, when it said they had risen a whopping 76% to 1,054 metric tons. While the U.S., Germany, Italy and France keep more than 70% of reserves in gold, China’s share is less than 2%.

“Prices have recently been supported by official sector buying,” Gornall said today, without listing any central bank. “Will the gap between the amount of gold held in reserve by the developing markets and that of the developed world close?”

Brazil, South Korea and Russia have all added gold reserves this year data from the International Monetary Fund show. Nations bought 254.2 tons in the first six months and may increase to 500 tons this year, the World Gold Council said in August, exceeding the 456 tons added in 2011.

China has the world’s largest foreign-exchange reserves, totaling $3.29 trillion in September, according to data by Bloomberg.

“Emerging-market economies from the G-20 countries are looking to elevate their gold holdings,” Ashish Bhatia, manager of government affairs at the producer-funded World Gold Council, said in an interview in Hong Kong yesterday. There’s “renewed interest from central banks on the demand side.”

U.S. holdings, the world’s largest, totalled 8,133.5 tons, or 76.6% of reserves, according to the World Gold Council data for this month. Germany, no. 2, had 3,395.5 tons, representing 73.9% of reserves, it said. China’s gold represented 1.8% of its total reserves. 

XAU/CNY Currency, 2 Years - (Bloomberg)

The Chairman and President of the Shanghai Gold Exchange told the LBMA gathering that the Shanghai Gold Exchange will launch an interbank market early next month that will initially begin with spot contracts and will gradually offer forward contracts. 

All banks trading on the China Foreign Exchange Trading System and National International Funding Centre will eventually be able to trade in the market, including foreign banks, Wang Zhe, chairman and president of the Shanghai Gold Exchange (SGE).

This move may further enable China to overtake India as the world’s biggest owner of gold.

According to the Hong Kong Census Bureau, in September Chinese gross imports soared by 30% reverting to the long-term trendline of 65 tons in gross imports per month, and rising to a total of 69.7 tons. Year to date China has now imported a very large 582 tons of gold, more than the official holdings of India at 558 tons 

According to Reuters reporting from the LBMA, the People's Bank of China general director, Xie Duo, announced that the central bank has no specific time frame on issuing more gold import licenses to banks, but is keen to further open up the market to the international community.  

China's Agricultural Bank, plans to launch trading of precious metals overseas in the next year or two. China's Agricultural Bank competes with peers including Industrial and Commercial Bank and China, China Construction Bank, Bank of China and Bank of Communications, among others, in attracting retail investors.

The bank sells physical gold and silver, and offers a gold accumulation plan that allows investors to contribute a small amount of money each month and take physical delivery after a period of time.

XAU/INR Exchange Rate, 2 Years - (Bloomberg)

Marc Faber gave a great presentation to the conference. He warned that a deflationary debt implosion will come. Not a question of when - but problem is knowing when.

He warned that Bernanke can drop as many dollar bills into this room as he likes, but he can't know what we will do with them. He said that QE may be boosting China rather than the U.S.

He said that problem is not just Bernanke but the Federal Reserve and that numerous US Fed members make Mr. Bernanke "look like an inflation hawk." 

Faber estimates inflation is now 5-10% and is much higher than bogus official estimates. With his customary wit, he said that 'only at the Fed don't they eat or drive.'

He remains bullish on precious metals and told the conference that he "would rather be long precious metals than industrial commodities."

For breaking news and commentary on financial markets and gold, follow us on Twitter. 

Cross Currency Table – (Bloomberg)

(Bloomberg) -- India’s Gold Sales on Dhanteras Seen 30% Higher From Year Ago
Sales of jewelry, coins were “very good” during Dhanteras yesterday, Mohit Kamboj, president of Bombay Bullion Association says by phone.

People accept that gold is the best commodity to invest in regardless of price levels: Kamboj

Demand may climb as much as 15% this quarter as festivals, price decline boost ornaments, coin, bar sales, Rajesh Mehta, chairman of Rajesh Exports Ltd., said on Nov. 9. Dhanteras is considered by the majority Hindu population as an auspicious day to buy the precious metal.

(Bloomberg) -- Gold ETF Sales Not Going to Happen on Major Scale, Barrick Says
People see gold as being a percentage of their portfolio and they want to hold it for the long term, Jamie Sokalsky, CEO of Barrick, says in an interview in Hong Kong today.

“It seems to be a core holding,” Sokalsky says.  “It’s sticky. It doesn’t have the characteristic of a   speculative-type of investment,” Sokalsky says. “I don’t see a huge risk that there’s going to be a selloff in the ETFs and it’s not in a bubble,” Sokalsky says.

(Bloomberg) -- Bank of America Sees Silver Averaging $39 an Ounce in 4Q 2013
“Easy monetary policy will be a substantial incentive for investors to increase their precious metal holdings in 2013,” bank says in report dated Nov. 9.


Gold edges up, holds near 3-week high on US fiscal woes - Reuters

Euro Trades Near Two-Month Low as Asian Stocks Slide, Gold Gains – Business Week

Rising gold price no bar for buyers in India – The Times of India

Gujarat's gold rush continues even on Dhanteras; 300 kg sold – Daily News & Analysis

China Lags U.S. in Gold Holdings, May Raise Total, LBMA Says - Bloomberg


Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings – Zero Hedge

Big Inflation Coming - GoldSeek

What Obama’s re-election means for gold – Market Watch

Gold, Silver, Riots, Theft & Global Collapse – King World News

Bernanke's stamp on Fed could tie hands of successor - Reuters

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GetZeeGold's picture




Get it while it's cheap. No pushing or shoving.


China sends us cheap crap and we subsidize gold for them......I think we're doing it wrong.


Colombian Gringo's picture

 Remember the Golden Rule: They who have the Gold, Rule.

exi1ed0ne's picture

The picture of the nice Asian lady fingering the gold brick turned me on.  Is that wrong?

are we there yet's picture

Goldfinger was a fun movie.  It showed the last time public cameras were allowed in the Fort Knox vaults.

Tango in the Blight's picture

The Indians rule then because even though the Indian central bank owns only a 'mere' 557 tons, Indian households own 20,000 tons totally, which is more than the US and the EU's gold reserves combined.

The Indians keep buying even moar gold, despite high prices:

are we there yet's picture

Really, I repeat, who has been selling this mass of gold for the last few years?

lolmao500's picture

The economy will take a big hit in 2013 because of all that will be going down with the tax increase/budget cuts/Obamacare...

GetZeeGold's picture



We'd cut the budget......if we had one.


How screwed up is your thinking if you can't even get Nancy Pelosi to pop a vote for your budget plan?

StychoKiller's picture

Yousa confuzed!  Senator Reid leads the Decepticrats and is supposed to come up with a budget...

GetZeeGold's picture



The President can offer his own.....and did......probably a mistake.

Snoopy the Economist's picture

I expected her to say 'you have to pass it first before you read it'. Obviously we have no standards left.

ultimate warrior's picture

While the U.S., Germany, Italy and France (allegedly) keep more than 70% of reserves in gold,

e-recep's picture

Expected outcome. The Chinese are getting richer.

bigdumbnugly's picture

LBMA: Chairman Says Chinese Gold Allocation To Rise

the chairman is right on the cutting edge, isn't he?

somebody probably better tell him micheal jackson died too.

GetZeeGold's picture



At least we still have Bobby Brown.

Sean7k's picture

Methinks China might be waiting to update everyone on their holdings until they surpass the US, then enquiring minds will want to know where it all came from- and the Chinese just might oblige.

viahj's picture

" we will pay you cash dollar for your gold, round eye"

Overfed's picture

I wonder if it could have anything to do with the "We buy gold/Compramos Oro" signs on every check cashing/payday loan/pawn shop/jewelery store in every town in the US?

silverserfer's picture

not untill AFTER the fiat game of musical chairs ends.

Quinvarius's picture

So.  Who is he trying to warn to GTFO of the way or be destroyed?

apberusdisvet's picture

The question, of course, is what's really in the vaults; physical or IOUs.  It will be interesting to see how the Repatriation Games play out in the next year.

caimen garou's picture

US has 75% gold reserves? or was that supposed to be 75% toilet paper reserves? rumors,lies,and more of the same.

Money By Trading's picture

My "gold allocation" willl probably rise this week.  I think the next couple of months will reward precious metals longs:

LawsofPhysics's picture

I agree, that dollar strength should begin falling apart right about the time congress does.

Zero Debt's picture

Wi ar koing over de fiskal kliff. Pi kold.

Bay of Pigs's picture

I prefer a lipthse, the "fithscal klifth".

caimen garou's picture

US has 75% gold reserves? or was that supposed to be 75% toilet paper reserves? rumors,lies,and more of the same.

cranky-old-geezer's picture



The country has only 2% of its reserves in the form of gold compared with the U.S. at 75%.

Nonsense, none of that (phantom) gold backs USD, it's a non-redeemable un-backed currency.  You can redeem a FRN for any of that (make believe) gold.

It's amazing how these smart educated people will stand in front of an audience spewing out fantasies an fairytales.

Their delusion is so chronic there's no hope for them.

Bansters-in-my- feces's picture



"U.S.A. has 75% of its reserves in gold"



They wish.

are we there yet's picture

For a long time now I have not heard an explination as to how gold buyers so massivly are out of balance with sellers. Who is selling? Mining is not making up the difference. Is the Fed and ECB having a slow fire sale spread out over years and that is why they are so secretive?

Weyland_Yutani's picture

I'm just average middle class but I've cut down hard on my consumption in the last two years. Instead of buying useless shit I buy physical gold/silver every single month.

Talked to some of my friends about buying gold and silver and they are totally clueless. It's like they don't even know what gold and silver is.

bushwarcrime's picture

YOu can bet Dick Cheney's sweet ass that PROC has 5000 tons by now.

They're mining 300 tons per year, and importing probly double that, and lying of course about what they have.

Question is what are they going to do with it?

Try and get the Rinimbi as a reserve currency?

Try to topple the dollar?  Not just yet.

If I was in control of gold price fixing and China pushes for Reserve status , I'd crash gold the low hundreds.

How else can it be done? War? Not with PROC, no way.