China Says It Must Add To Gold Reserves To Promote Yuan Globalization And As An FX Hedge

Tyler Durden's picture




 

Back in September, when we provided the monthly observation on what has become a record year to date surge in Chinese imports of gold from Hong Kong, we reminded readers that "in December 2009, the China Youth Daily quoted State Council advisor Ji as saying that a team of experts from Beijing and Shanghai have set up a "task force" last year to consider growing China's gold reserves. "We suggested that China's gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years," the paper quoted him. Has China managed to accumulated 6,000 tons yet?  We won't know for sure until the official disclosure which will come when China is ready and not a moment earlier, but at the current run-rate of accumulation which is just shy of 1,000 tons per year, it is certainly within the realm of possibilities that China is now the second largest holder of gold in the world, surpassing Germany's 3,395 tons and second only to the US."

Two days ago we showed that the relentless importing of gold in China continues, yet what has been missing is an update direct form the horse's mouth how China feels toward gold (because we certainly know how it feels toward US Treasury paper). Today, we finally got one straight from Beijing, and that during a very carefully supervised time when the 18th Communist Congress is still in session, and every word out of China has profoundly telegraphic implications.

From Bloomberg:

  • China needs to add to its gold reserves to ensure national economic and financial safety, promote yuan globalization and as a hedge against foreign- reserve risks, Gao Wei, an official from the Department of International Economic Affairs of Ministry of Foreign Affairs, writes in a commentary in the China Securities Journal today.
  • While gold prices are currently near record highs, China can build its reserves by buying low and selling high amid the short-term volatility, Gao writes in newspaper
  • China’s gold reserve is “too small”, Gao says

And there it is: while many have speculated that China, which has not given an update of its official holdings in nearly 4 years, is quietly building up its gold reserve holdings behind the scenes, there was no reason to worry. The time to worry would be when China was starting to give indications it is prepared to tell the world what its true gold holdings are (by now certainly well over 1000 tonnes). And the above piece from Wei is just that: because in saying very little, the Chinese official with a key political post has just given the first hint that China is preparing to give its official gold far greater focus. And from there, the time until China releases an IMF update on its official reserve holdings will be measured in days if not hours. Because all the gold will have long been accumulated.

And once that happens it will be too late to buy any incremental gold. Or tungsten.

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Wed, 11/14/2012 - 00:26 | 2978797 holdbuysell
holdbuysell's picture

Just be careful from whom you buy:  the Federal Reserve Bank of New York and the Bank of England have been known to provide bad delivery bars.

Ask Germany.

http://www.zerohedge.com/news/2012-11-09/exclusive-bank-england-fed-no-i...

Wed, 11/14/2012 - 03:33 | 2978884 xtop23
xtop23's picture

And buy in units of 1oz. or less. They're a lot more difficult to produce and much more expensive to counterfeit. Not really cost effective at current valuations. They like the 10oz +'rs.

When we go truly parabolic though, your own mother will sell you tungsten.

Wed, 11/14/2012 - 00:26 | 2978804 Stuart
Stuart's picture

Got Gold Bitchez!!  Better get more soon, not paper, the real stuff.

 

Wed, 11/14/2012 - 00:32 | 2978806 Dr. Engali
Dr. Engali's picture

China to JPM : Thank you very much for suppressing the price of gold and helping us get it cheaper than we otherwise could have. We know we promised banking in China for return but guess what.........readership changed bitch ...fooka yu.....your gold berong to us!

Wed, 11/14/2012 - 00:34 | 2978814 The Shootist
The Shootist's picture

6,000 tons? If they're in that ballpark, they better hope to hell it's not the tungsten shit from the fed or LBMA.

Wed, 11/14/2012 - 00:56 | 2978853 ilovefreedom
ilovefreedom's picture

I would actually not mind this as it would expose illegitimate holdings.

Only so many multi-kilo investment grade bullion bars. 

Let's start auditing and assaying those since most havent seen the light of day in decades.

Wed, 11/14/2012 - 05:38 | 2979091 Urban Redneck
Urban Redneck's picture

6,000 tons would imply that they were not fully "truthful" with their last disclosure of "official" holdings as they do have domestic demand.

Wed, 11/14/2012 - 02:39 | 2978975 hmmtellmemore
hmmtellmemore's picture

Harro Opium War cawring, it for you

Wed, 11/14/2012 - 04:10 | 2978978 BlackholeDivestment
BlackholeDivestment's picture

Bugs to All the Tea: Eh, what's up Doc? Dig the trip from the Essense of Man, and thanks for helping with the hole. I hope you get the General idea better than you have. The Broad? Well, she can't act ''alone'', not without ''heels'' aaah buv her, ah buv her head. Oh my no, don't stop ...thinking about The Day After Tomorrow and the other side of the Rainbow Flag next to Old Glory. Use yer head, they do it on Malls in public and people just walk on and buy when Black Friday Comes daah dah dum dumb. http://www.youtube.com/watch?v=UVQKiqCZ9No Put your ear a bit closer to the track and you will feel the vibe of the Peace Train coming to Jerusalem. The smoke and mirros have everyone ignoring why people of Fukushima are looking down the other side of Morning. Hey, wait a minute. Doc, Doc, wake up Doc, lets get back to the future. It's curtains for the ignorant slut for a reason. http://www.youtube.com/watch?v=Ul5HTPES-yU Just weight, you will not see, just a rider on the black hole. You will hear the sound of Krugman's Fifth Symphony, played inside ''One New World Devil's Tower'' tune, clear enough to hear Aaron's trumpet. ''Rock'',  ah like ah hewn rolling stone Russo. Oh, ''Dimon's'' are forever, odd ''fellows'', risen for hoursemen from the Ground Zero Interest graven image. Final confirmation, that the Lady; drinking the 911 wine of wrath from the give me Silver Blue and Gold shelter Helter Skelter cup overflowing with puts, while naked and without Magic Underwear under her favorite Red vote 2 party number 666-ADD-Debt call me Wha Wha Whaa Blondieee I'm on the hook not in the Good Book dress, is a tramp stamped design for Agent Smith. http://www.youtube.com/watch?v=pr7QhIJVvxo 

The Pope's Butler did it? LMAO. I bet the two witnesses in that case were not related to Daniel's prophetic call of destruction or any murdered person that left behind a record of events that lead up to the revelation of their death. http://www.youtube.com/watch?v=2ySu-kY3YWc&feature=fvwrel

Wed, 11/14/2012 - 07:07 | 2979132 onebir
onebir's picture

^^^=stream of unconsciousness.

Wed, 11/14/2012 - 08:06 | 2979185 Snidley Whipsnae
Snidley Whipsnae's picture

coded message?

Wed, 11/14/2012 - 00:33 | 2978808 Yen Cross
Yen Cross's picture

Blah, Blah! India is loading up! BTW? What happened to the Indian " off shore" parts expansian idea?

  Earth to Qualcomm?

Wed, 11/14/2012 - 00:42 | 2978828 EHM
EHM's picture

The Chinese have a great sense of "tradition."

Wed, 11/14/2012 - 00:46 | 2978836 wandstrasse
wandstrasse's picture

surpassing Germany's 3,395 tons

-> surpassing Germany's 3,395 tons OF PROMISES / LIES / TUNGSTEN... that is not so hard to accomplish / hardly worth mentioning.

Wed, 11/14/2012 - 00:51 | 2978844 Big Ben
Big Ben's picture

China owns over $1 trillion in US debt. By my calculations, that would buy about 17500 metric tons of gold @ $2000/oz. Just a thought...

The US is never going to repay its debt. But gold will always be gold.

Wed, 11/14/2012 - 01:28 | 2978907 infiniti
infiniti's picture

China owns $1 trillion in US debt like the US owns 1 million Chinese factories. Good luck collecting.

Wed, 11/14/2012 - 12:46 | 2980146 falak pema
falak pema's picture

the US oligarchs do NOT own 1 million chinese factories. They sub to 1 million chinese factories owned by chinese entrepreneurs.

Ownership is simple concept.

Wed, 11/14/2012 - 01:04 | 2978868 BobPaulson
BobPaulson's picture

Announcing: the worst kept secret in the world.

Wed, 11/14/2012 - 01:13 | 2978886 Yen Cross
Yen Cross's picture

 China is to "Africa" as United States is to "South America"...

     We need to write down debt...   In the beginning, growth was good.   Lets look at "energy". massive pork belly spending?

Wed, 11/14/2012 - 02:14 | 2978957 putaipan
putaipan's picture

mmmmm....polk berries!

Wed, 11/14/2012 - 02:44 | 2978980 Yen Cross
Yen Cross's picture

 uhhhhh ? " get to work"  BITCH! Or I'll pimp slap you!

Wed, 11/14/2012 - 01:17 | 2978887 ebworthen
ebworthen's picture

Funny.

The world producer of nearly everything now moves to the gold standard.

Wonder what Steve LIESman and the other paper tigers will say; "Gold is a barbarous relic, the U.S. will stay strong with commentary, promises, and paper fiat!"

Right Stevey boy; didn't work for the U.K. or France or Spain or Portugal or...

But nevermind, history is meaningless and "this time is different", right?

No one needs tangibles, no one needs a deed or rights to their posessions, no one needs the rule of law just the U.S.S.A. Ponzi dreamland of lies and theft, right!?!?  Stevie boy!?!?

Fucking fools, God-damned fucking dreaming somnambulent Keynesian propagandistic MSM mealy-mouthed clueless tongue-wagging intellectually challenged, hopium dream of the past addled fucking fools!!!!

Wed, 11/14/2012 - 01:20 | 2978896 Yen Cross
Yen Cross's picture

Excellent post!

Wed, 11/14/2012 - 01:22 | 2978898 infiniti
infiniti's picture

"Moves to the gold standard"

 

Uhh... THEY HAVE NO GOLD

Wed, 11/14/2012 - 02:44 | 2978981 dark pools of soros
dark pools of soros's picture

we went from gold, to oil to currently on the bomb standard.

after that, what's left?  pussy standard?

 

Wed, 11/14/2012 - 01:19 | 2978892 MsCreant
MsCreant's picture

We all assume Fort Knox is empty. What if the US was accumulating on the sly, and not telling one solitary bitch about the whole thing?

Wed, 11/14/2012 - 01:26 | 2978902 BobPaulson
BobPaulson's picture

Well, they certainly have a lot. In a complete jump from fiat to gold, the US would come out way ahead of China if the stated reserves exist. Believing the US actually has empty vaults down there is a bit of a stretch for me, probably because I know it's what I want, and I forever try to remind myself not to believe simply what I want to happen.

Wed, 11/14/2012 - 01:29 | 2978908 The Shootist
The Shootist's picture

That's as likely as Obama the Legend not being an empty suit commie fraud.

Wed, 11/14/2012 - 03:42 | 2979027 fukidontknow
fukidontknow's picture

to stack you gotta have cash left over, the US blows it all on war and banksters so probably no stack

Wed, 11/14/2012 - 09:14 | 2979330 MsCreant
MsCreant's picture

That's what is true for you and I. However, for the US, "We print, therefore we are." Just sayin'.

Wed, 11/14/2012 - 11:57 | 2979894 falak pema
falak pema's picture

That's what the two twins of Miami sang: we print our emails to the MIC big brass, who pay us back under their desks in mad gladness.

We print our scented emails but we spend more on perfume, thats why we are always in debt. God, this under the desk stuff is good for my heart but not for my bank account. 

I guess whats true for the twins is true for the US! 

Wed, 11/14/2012 - 01:20 | 2978897 infiniti
infiniti's picture

China's monetary base is the largest in the world - yet their gold reserves are among the lowest. Good luck, China.

Wed, 11/14/2012 - 01:31 | 2978912 BobPaulson
BobPaulson's picture

Yes, my point above. They are not going to poke a hole in the US Dollar any time soon if they are the second biggest counterparty to that debt. That is endgame and they can't do it until their domestic market for their goods is stronger, and the US military is looking a bit more underfunded. 20 years?

 

 

Wed, 11/14/2012 - 02:25 | 2978965 crazyjsmith
crazyjsmith's picture

20 yrs? But the US will be the world's largest exporter of oil...
Didn't you read that article? We'll be rich, bitch!!!

Wed, 11/14/2012 - 02:59 | 2978999 sitenine
sitenine's picture

+1 thanks for the smile :-)

Wed, 11/14/2012 - 08:34 | 2979247 youngman
youngman's picture

Remember China is now a Primary Dealer...Geitner gave them that status......in time we will know why....and I do not think is was for the benefit of the USA

Wed, 11/14/2012 - 02:26 | 2978966 nevket240
nevket240's picture

They have just upped the ante on the other RB's around the world including our deluded doughnutz here in OZ.

This is the legitimizing of Gold as a world currency base. This will have the Arse Puckerers at the IMF scratching their nuts about how to keep themselves relevant in a world where Sovereigns give em the finger.  I hope

regards

Wed, 11/14/2012 - 02:46 | 2978984 Yen Cross
Yen Cross's picture

 Fu..K  Big Bird! I'm Long basement babies!

Wed, 11/14/2012 - 02:48 | 2978987 Yen Cross
Yen Cross's picture

 Mrs. Creant, I'll  lay the wood! Just give me a call!

Wed, 11/14/2012 - 02:58 | 2978993 sitenine
sitenine's picture

I'd say China can afford the gold, considering their currency just hit all time highs against the dollar http://news.xinhuanet.com/english/business/2012-11/13/c_131971563.htm

China is also the worlds top producer http://en.wikipedia.org/wiki/Gold_mining_in_China

And, very little of that PHYSICAL gold ever leaves the country http://www.zerohedge.com/contributed/2012-11-04/emperor-has-no-gold

The Chinese are well positioned for a hostile takeover IMHO.  The NWO crowd would be wise to pay attention - you know what they say about the best laid plans of mice and men...

Wed, 11/14/2012 - 02:53 | 2978995 DionysusDevotee
DionysusDevotee's picture

Wheres the source?

Wed, 11/14/2012 - 03:04 | 2979002 Peter Pan
Peter Pan's picture

In the longer run there is a direct relationship between gold and human stupidity. The higher the price of gold, the higher the level of stupidity that pushed it there.

Ignorance and lies have been the medium of exchange for so long, that knowledge and truth now seem counterfeit. But not for much longer. Gold and silver are eventually vindicated. 

Wed, 11/14/2012 - 03:07 | 2979005 kedi
kedi's picture

So China is turning other country"s debt, a huge pile of it U.S. into gold. Isn't that really what they are buying it with? So when the debt chain collapses and people go looking to collect on their paper, a lot of it will have turned into gold in vaults in China. Good luck getting that back in exchange for you IOU's. So how will that work out as to the value of gold in the rest of the world? Those buying gold as a personal hedge against the collapse of fiat currency will sort of be stuck with a commodity that their country will abhor due to it's being controlled in too large a part by another country. In a chain of real economic value, will gold bought with overextended debt, stashed in China be a viable or actually valuable currency in any other country>

Wed, 11/14/2012 - 04:08 | 2979040 Yen Cross
Yen Cross's picture

SHORT RISK!

Wed, 11/14/2012 - 04:43 | 2979061 savagegoose
savagegoose's picture

yippy

Wed, 11/14/2012 - 05:12 | 2979079 q99x2
q99x2's picture

They don't need gold because of virtual currencies, which also have physical forms, now provide the same benefits as a gold based currency as well as having additional flexibility. But gold is nice because you can hold it and trade it without having to depend on any dang computers.

China is making big centrally planned decisions that typically end in disaster for those they are supposed to represent.

Wed, 11/14/2012 - 06:10 | 2979108 Alpha Monkey
Alpha Monkey's picture

bought my first bitcoins a few days ago. 

Wed, 11/14/2012 - 05:41 | 2979085 falak pema
falak pema's picture

China now will make its official entrance into the world currency game. The last ten years has seen China emerge as a world contender; witness the Peking Olympics blessed by GWB himself in dire WS meltdown.

With the NEW politburo now in place, China will rev up its monetary gear, and use the current USD crisis and surrogate Euro zone meltdown to impose itself as an alternative superstate with its own money backed up by its BRIC allies and a precious metal back up.

Can the one party crony politburo state manage this hubristic transition?

BIG QUESTION for the decades to come!

Lets for a moment give them the benefit of the doubt as the West is going south bigtime and the East is on an economic roll.

This gobal geo-strategy will be complete and official the DAY the prime commodity that makes the world go round, aka ME OIL, becomes pegged to Yuan and unpegged to USD. That day the multipolar world will have truly emerged and the hegemony of King $ and of Pax Americana military play will be over.

No more Saud and Chinese money to back up General Petraeus and Consorts hanky-panky in Iraq-Iran-Afghan sheeple bashing. All MIC hanky-panky from then on reserved on Miami sheeple bashing. 

Look ahead and see whats written in the tea leaves of the tea party stalwarts who support MIC.

Neo cons and government shills, the Alamo will now be beseiged once again. You can practically hear those trumpets play. That's what US hubris has now achieved in the tatters of its own world "clash of civilization" play. 

Meanwhile in Euro zone the banks impose the Club Med bashing of the south while the north wrings in hands knowing one day Nemesis is going to pay them also a visit. We are in tipping times. 

The true initiative lies with the Oligarchs who own the world from Caymanista land. The new Conquistadors now ready to work with whoever champions the new Habsburg world empire; whether it be DC or London City or Pekin middle kingdom.

Guns for hire and extractive empires ready to pump commodities for the new Czar/Mongol Lord of world empire! 

Whatever the monetary denomination, USD or Yuan, the MONEY line belongs to the Oligarchs, as they have the technology, the resources and the world networks in place. They are the new Medecis of this Renaissance age. Their banks, their multinationals will talk to whoever is political top dog; as he is just a debt slave of their oligarchy. Thats the price for buying rice to feed the people.

On this issue remember how this same Oligarchy breed captured the new money line of USA in 1913, when they struck a deal with the Rockafella-Morgans in Jeckyll Island and spawned the private run FED.

Nothing new to repeat what happend in London city in 1815, then in 1913 in DC/WS !

We had kings and Popes, in the last feudal age. Now we will have transnational Oligarchs and Statist Czars to share the cake. In this new global neo-feudal age, centrally planned to serve these two crony cabals.

Where are the new GWs and LAfayettes of first world? Now faced with the ruins of its "we the people" meme, from behind the tinsel curtain of imprisoned democracy and republic. Just look at how the debt mountain grows to ensure the nations' servitude all over the world.

Peak Enlightenment is the greatest betrayal of Mankind.

Wed, 11/14/2012 - 06:51 | 2979120 zerozam
zerozam's picture

I stopped reading after your third sentence..

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