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China Gold Reserves “Too Small” - Ensure “National Economic and Financial Safety”

Tyler Durden's picture




 

From GoldCore Gold Bullion

China Gold Reserves “Too Small” - Ensure “National Economic and Financial Safety”

Today’s AM fix was USD 1,724.50, EUR 1,353.08, and GBP 1,085.21 per ounce. 
Yesterday’s AM fix was USD 1,724.75, EUR 1,360.86, and GBP 1,091.39 per ounce.

Silver is trading at $32.47/oz, €25.60/oz and £20.54/oz. Platinum is trading at $1,585.00/oz, palladium at $637.00/oz and rhodium at $1,150/oz.

Gold is marginally lower in all fiat currencies today except for Japanese yen which has fallen nearly 1% against gold and is close to reaching record nominal highs in yen terms (see table and chart).

Gold edged down $3.40 or 0.20% in New York yesterday and closed at $1,724.50. Silver saw odd aggressive selling which saw the price fall sharply to $32.128 prior to an equally sharp price recovery as buyers took on the sellers leading to silver finishing the day with a gain of 0.12%.


Gold Prices/Fixes/Rates/Vols – (Bloomberg)

Gold inched up on Wednesday as the euro recovered against the U.S. dollar, and platinum ramped up its highest gain in the past three weeks on real concerns that supply will not meet the demand due to output issues because of the striking mine workers this year.

President Obama will hold his first solo news conference since November today and is expected to take questions from reporters at 13:15 EST.  Comments about the “fiscal cliff” may have a short term effect on gold bullion.

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 which was reported on by Bloomberg.

China’s gold reserve is “too small”, Gao said and 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 wrote.

The People’s Bank of China is accumulating significant volumes of gold under the radar of many less informed market participants which is bullish.

The Chinese government is secretive about its gold diversification and buying and does not disclose gold purchases to the IMF.

Therefore, there has been no official update to their holdings since the barely reported upon announcement four years ago that Chinese gold reserves had risen from just over 500 tonnes to over 1,000 tonnes.

In 2009, State Council advisor, Ji said that a team of experts from Shanghai and Beijing had set up a task force to consider expanding China’s gold reserves. Ji was quoted as saying "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”.

China is likely to have been quietly accumulating another 1,000 or 2,000 tonnes in recent years and astute market participants realise that the announcement by China of a dramatic increase in gold reserves could lead to sharp price gains.

The very low level of the People's Bank of China's gold reserves vis-à-vis their massive foreign exchange exposure and compared to western counterparts gold reserves will continue to be a source of significant gold demand in the coming months which will support gold and may contribute to higher prices in 2013.


XAU/JPY Currency – (Bloomberg)

Today the US Producer Price Index results are at 1330 GMT.

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

NEWSWIRE
(Bloomberg) -- Barclays Still Favors Overweight Precious Metals, Agriculture
Barclays Plc is keeping its recommended investment weightings in precious metals and agriculture.

The bank’s largest overweight’s are in gold, corn and wheat, and the biggest underweight’s are for aluminum, U.S. natural gas, zinc, nickel and crude, it said in its monthly “research rankings” report e-mailed today.


Cross Currency Table – (Bloomberg)

NEWS

Gold to Gain to $2000 on Money Printing, Deutsche Bank Says - Bloomberg

LBMA Meet Forecasts Gold At $1,843/oz By Next Sept – Poll - Reuters

Platinum shortfall largest in decade – The Financial Times

Gold ends lower as platinum, palladium rally – Market Watch

Palladium, platinum rally after report, gold flat - Reuters

COMMENTARY

Gold Industry Cautiously Optimistic About 2013 – The Financial Times

CFTC's Chilton Repeats Belief In Silver Market Manipulation – You Tube

Some Gold Investors Want Their Own Fort Knox – The NY Times

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

 

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Wed, 11/14/2012 - 09:03 | 2979298 GetZeeGold
GetZeeGold's picture

 

 

You can really never have enough gold. But China is buying hand over fist....it's almost like they know something.

Wed, 11/14/2012 - 09:09 | 2979310 TrumpXVI
TrumpXVI's picture

Yup.  My gold reserves are too small, too.

 

"DAHling, you can never be too rich, too thin, or too well armed."

 

 

Wed, 11/14/2012 - 09:14 | 2979331 Gully Foyle
Gully Foyle's picture

TrumpXVI

That's not what your wife claims is "too small".

But hey, we all have our priorities.

(Biden 2016, Black is Black, I want my baby back)

Wed, 11/14/2012 - 10:01 | 2979451 Dalago
Dalago's picture

Size does matter...

Wed, 11/14/2012 - 11:30 | 2979787 icanhasbailout
icanhasbailout's picture

Someone get Gordon Brown, stat!

Wed, 11/14/2012 - 11:56 | 2979893 DoChenRollingBearing
DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing announces that it too will be adding to its gold reserves soon.  What do we know, and when did we know it, bitchez.

Wed, 11/14/2012 - 09:11 | 2979317 Gully Foyle
Gully Foyle's picture

GetZeeGold

They know they need to purchase as many rescources as fast as possible before the US and Europe fuck shit up for them.

They want to be the Big Bad in their sphere of influence and are succeeding quite well.

China and Russia are the only stumbling blocks on the way to One World Government. They reckon, correctly, they are just as good at being in charge as the Northern Western world is.

(Biden 2016 take that Lieberman)

Wed, 11/14/2012 - 09:14 | 2979325 GetZeeGold
GetZeeGold's picture

 

 

China and Russia are the only stumbling blocks on the way to One World Government.

 

Well.....there is me....but I'm only like one person.

 

Wed, 11/14/2012 - 10:25 | 2979538 old naughty
old naughty's picture

I really really hope you are right...

Wed, 11/14/2012 - 09:23 | 2979347 TeamDepends
TeamDepends's picture

And PMs go from red to green as we speak.

Wed, 11/14/2012 - 10:22 | 2979524 eclectic syncretist
eclectic syncretist's picture

They know gold is forever, whereas anything man-made depreciates.

Thu, 11/15/2012 - 08:50 | 2983479 Freegolder
Freegolder's picture

This article re China and gold does not appear at China Securities, nor Bloomberg, it originated yesterday here at ZeroHedge, with no link.

Makes one wonder.

What. Is. True.

Tyler?

Wed, 11/14/2012 - 09:03 | 2979299 BBullionaire
BBullionaire's picture

Everyone's gonna need Bullets Beans and Bullion

Wed, 11/14/2012 - 09:13 | 2979324 Gully Foyle
Gully Foyle's picture

BBullionaire

Utah will accept Gold and Silver as currency.

So where is the mad rush to Utah to live out ones "bullion" fantasy?

There isn't one because people prefer to talk the talk instead of walking the walk.

(Biden 2016, oh fuck this is really happening)

Wed, 11/14/2012 - 09:21 | 2979344 TeamDepends
TeamDepends's picture

Biden 2016:  I'll give you the whole load

Wed, 11/14/2012 - 09:41 | 2979395 TeamDepends
TeamDepends's picture

Most Americans, especially those near the coasts, are terrified of Mormons.  And why not?  After all, they believe in some kind of space man God.  Or is that the Tom Cruise religion?  It is getting harder and harder to keep up these days.

Wed, 11/14/2012 - 09:43 | 2979400 LawsofPhysics
LawsofPhysics's picture

Look at Utah's growth rate moron.  The "mad rush" is there for everyone to see.  They have a booming economy.  Thanks for pointing that out.

Wed, 11/14/2012 - 10:48 | 2979623 fourchan
fourchan's picture

sure is booming, very nice people, great skiing.

Wed, 11/14/2012 - 10:40 | 2979595 Tinky
Tinky's picture

but, but...

Wed, 11/14/2012 - 09:08 | 2979308 Antifaschistische
Antifaschistische's picture

It shoud read...

China Dollar Reserves “Too High" - Ensure “National Economic and Financial Safety”

Wed, 11/14/2012 - 09:26 | 2979353 BobPaulson
BobPaulson's picture

Yes. Exactly. Every time the US is devalued more, who suffers? Savers. The biggest sucker is the one holding US dollar bonds frankly.

Wed, 11/14/2012 - 09:13 | 2979323 Silverhog
Silverhog's picture

I just ordered a Gold Pamp 10 gram bar this morning, watch for the spike.

Wed, 11/14/2012 - 09:15 | 2979332 GetZeeGold
GetZeeGold's picture

 

 

Bracing for impact.

Wed, 11/14/2012 - 12:51 | 2980184 Hulk
Hulk's picture

Damn, up 8 bucks. Quick, someone else buy another 10 grams...

Wed, 11/14/2012 - 09:22 | 2979346 MsCreant
MsCreant's picture

Golden Pampers, for WTSHTF.

Wed, 11/14/2012 - 09:43 | 2979402 LawsofPhysics
LawsofPhysics's picture

What is the percent tungston?

Wed, 11/14/2012 - 09:20 | 2979342 a growing concern
a growing concern's picture

Does anyone really believe they're only at 1000-2000 tons in the past few years?  If they said several years ago that they'd like to be at 5000-6000 tons by now, and they aren't exporting any gold that's produced in China, then I'd have to imagine that they're much closer to their goal than the experts are estimating.  The experts are seeing China's gold accumulation as a capital preservation exercise, but I think it is better viewed as a take-the-US-out-at-the-knees exercise.  Once they have handily surpassed the US in gold holdings, which shouldn't be much longer now, it seems like some sort of gold-backed Chinese currency would do in the USD once and for all, and it will be China's turn to run the world for awhile.

Wed, 11/14/2012 - 10:22 | 2979526 Sean7k
Sean7k's picture

Unless the US DOES become the largest oil exporter by 2016, in which case, the petro dollar will be alive and well. Just food for thought...why use up all your reserves when you can use everybody else"s? Then be in position to charge ever increasing amounts for your oil?

 

Wed, 11/14/2012 - 12:08 | 2979939 BattlegroundEur...
BattlegroundEurope2011's picture

Problem is will the US domestic users of oil be happy with the price hike?

 

Wed, 11/14/2012 - 10:27 | 2979542 eclectic syncretist
eclectic syncretist's picture

The mere fact that the Chinese government would publicly announce a desire to increase gold holding indicates they are already pretty comfortable with the amount of gold they have accumulated and wouldn't mind seeing the price increase.  They wouldn't make such announcements only to put the price up on themselves, after all.

Wed, 11/14/2012 - 13:09 | 2980259 Bohm Squad
Bohm Squad's picture

DingDingDing...we have a winner.

 

 

Wed, 11/14/2012 - 11:00 | 2979657 Its_the_economy...
Its_the_economy_stupid's picture

With what navy?

Wed, 11/14/2012 - 11:13 | 2979699 BobPaulson
BobPaulson's picture

That would require a shitload of gold. Anybody here know where there is info estimating their domestic production that is quietly being engulfed? I'm curious how much is going into the hands of individuals, as that is a robust decentralized holding that can't be leased out or tinkered with by megalomaniac bankers.

Imagine an attempted checkmate scenario where suddenly China dumps its dollar reserves for gold (just short of an act of war); that seems to be what everybody is implying China will do. Even if there are multiple claims against the US physical holdings (fractional reserve gold banking) if the US still holds the physical, they can simply reneg on their obligations and settle in fiat if there is a panic for physical, thus screwing the paper gold holders.

Wed, 11/14/2012 - 09:29 | 2979362 economists_do_i...
economists_do_it_with_models's picture

China as an 'economic power' is like saying McDonald's provides a 'fine dining experience.'

Cheap prices and *VALUE* do not always co-exist.

The world would survive JUST FINE without their inferior products that wear out in 6 months or less.

Just have Wal Mart boycot Chinese products, and their economy would tank in a heartbeat.

China needs the U.S. a lot more than we need them...

Wed, 11/14/2012 - 09:41 | 2979396 a growing concern
a growing concern's picture

Be sure to remind us how much China needs us when their goods become too expensive for the American consumer.  They have 1.3 billion of their own consumers, who are recently coming into disposable income of their own.  China will no longer need the US in just a few short years, at which point we will be exporting our sweatshop-produced goods to them.

 

But I'm sure that could never happen, because we're the big bad US of A, right?

Wed, 11/14/2012 - 09:48 | 2979410 LawsofPhysics
LawsofPhysics's picture

So you are saying America will become China?  Wake the fuck up, much of california already is.  Guess it's time to start asking for Gold in exchange for my soybeans.  Sounds good to me.

None of this is sustainable, please wake the fuck up.

Wed, 11/14/2012 - 09:55 | 2979437 a growing concern
a growing concern's picture

Why are you yelling at me?  I'm well aware that none of this is sustainable.  And I woke up over an hour ago, so... not sure what your point is.

Wed, 11/14/2012 - 09:45 | 2979406 LawsofPhysics
LawsofPhysics's picture

Likewise, the Chinese are use to crap product and they don't need the U.S. to buy their own crap.

Just remember what happens when goods and services stop crossing boarders.

Wed, 11/14/2012 - 09:31 | 2979370 MsCreant
MsCreant's picture

Okay, I'm a moron. Someone esplain to me why China tell folks dis stuff? 

In all seriousness, it makes no sense. If I want to buy, I just do it. I want the price down, not up. I don't tell you I want it so that you will raise your price. 

What if they want the price up? Who might that hurt? Who are they really at war with?

Just sayin.'

I said this on another thread, "In the U.S., we print, therefore we are." Someone was being reasonable and saying the US ain't stacking because they have too many other bills to pay. I say if they want to print, it does not matter. They can do what ever they want to. When you find stashes of cash like they found at Sadam's palace, do you think that is really an entry on someone's book somewhere? Like hell you do. 

Wed, 11/14/2012 - 09:47 | 2979380 GetZeeGold
GetZeeGold's picture

 

 

Someone esplain to me why China tell folks dis stuff?

 

Because it's a jab in Uncle Sam's eye and they think it's funny. They also know their bonds aren't worth jack anymore. Plus it forces the US to subsidize it even harder....so they can keep buying it cheaper. Think about it...and it will all make sense.

Wed, 11/14/2012 - 09:52 | 2979431 a growing concern
a growing concern's picture

I wonder what percentage of their gold they're actually producing themselves, either in China or through their various partnerships and mine holdings around the world.  If they're producing the majority of their gold themselves, then maybe they don't really care what the price does on the open market.

 

Or, perhaps those comments could be construed as a message to the Chinese people that gold is a good asset to hold for wealth protection (hint, hint).  

 

Regardless, I don't think they gave away anything that we didn't already know (I mean, we already know they're buying hand over fist, not to mention what they're producing in-country).  

Wed, 11/14/2012 - 10:25 | 2979534 Winston Churchill
Winston Churchill's picture

Yep.

But why are they talking about it at all ?

Very un Chinese.Unless they have already amassed a

lot,lot  more than we are guessing.

Wed, 11/14/2012 - 09:39 | 2979390 Sweet Chicken
Sweet Chicken's picture

I Love Gold

Wed, 11/14/2012 - 09:43 | 2979405 youngman
youngman's picture

It also tells the rest of the world what lies in the future....China is saying we are here to stay...we are becoming powerful....and we will be a leader ...so invest in us...more or less

Wed, 11/14/2012 - 09:46 | 2979407 GetZeeGold
GetZeeGold's picture

 

 

China thinks in terms of hundreds of years.....the west thinks in terms of thousands of seconds.

Wed, 11/14/2012 - 09:49 | 2979418 AnAnonymous
AnAnonymous's picture

'Americans' think in terms of ending history. See their depletion of resources efforts (which has been very successful so far)

Wed, 11/14/2012 - 10:33 | 2979572 TheFourthStooge-ing
TheFourthStooge-ing's picture

The criticism of America has always been a bit infantile. One is familiar with the theory from psychoanalysis, when people talk about transference, or when suppressed feelings or emotions are overcome by projecting them onto others. It may work for a while, improving one's feeling of self-worth by devaluing an imagined adversary. But it always falls short. Which is why the ritual must be constantly carried out anew.

Wed, 11/14/2012 - 09:46 | 2979408 JustObserving
JustObserving's picture

People are focused too greatly on China's official reserves while the Chinese people buy a lot more gold.

India's official reserves are 557 tons while consumers hold 18,000 tons.

Similarly in China, consumers use 500 tons in gold jewelry every year.

Total purchases by consumers of gold jewelry and gold bullion in China is on the order of 1000 tons, 40% of world production and it swamps official purchases.  These purchases by consumers will continue every year even after China has increased its official gold reserves.

Wed, 11/14/2012 - 09:49 | 2979420 LawsofPhysics
LawsofPhysics's picture

Correct.  China will do what the U.S. did and confiscate the gold so that they can set the world's economic policy in their favor.  Good luck with that China.

Wed, 11/14/2012 - 10:40 | 2979596 Sean7k
Sean7k's picture

The same is true in Turkey, the Middle East and the US. Most of the gold is in private hands, there are atleast 170,000 tons estimated. So, why does the fascist west seem unconcerned over all the gold being transferred into oriental and russian hands? 

Why all the paper leveraging? Since in the end, whatever gold is left, remains in the hands of the central banks and their exchange allies? How has the game continued to play for so long after it has been called?

Why are governments making counterfeits?  What happens if all currency goes electronic and you can only spend your gold with a wealth tax garnishing it's true value or through collateral for investments? Do the banks then reel in all that left? 

How will they contain black markets? Can they? Do we want to live in that world? 

Why has every primary dealer been calling for 2000 gold why simultaneously knocking down the price with paper dumps and short running? 

Why would you be willing to break down the markets? Unless, you were working on a system that excludes them in the traditional sense? 

It seems we are asking the wrong questions. All central bankers work in collusion, whether the US, Britain, China or Russia. Therefore, their willingness to create artificial animosities must serve a greater purpose- likely spreads and movements that are front run and guaranteed through HFT machinations. 

Wealth transfer- the two words that motivate and power all the Elites.

Wed, 11/14/2012 - 10:02 | 2979456 hawk nation
hawk nation's picture

Obama is having a press conference today so that should cause gold and silver to rally

I think he will be pushing for stimulus for infrastructure projects putting us further into debt. This years deficit i predict may reach 2 TRILLION

Wed, 11/14/2012 - 10:07 | 2979479 JustObserving
JustObserving's picture

Never forget to add the $6.7 trillion increase in unfunded liabilities every year.  The official debt is just the tip of the debt iceberg.

Wed, 11/14/2012 - 10:10 | 2979484 cranky-old-geezer
cranky-old-geezer's picture

 

 

Hmmmmm..... that "barbarous relic" sure seems important to people besides Bernanke.

Wed, 11/14/2012 - 10:30 | 2979557 Winston Churchill
Winston Churchill's picture

I'm sure Zimbabwe Ben has the  barbarous relic in his personal portfolio.

He may be a bankers tool, but he is not that stupid.

Wed, 11/14/2012 - 10:31 | 2979562 orangegeek
orangegeek's picture

Gold backed currency or military backed currency.

 

Might is right as they say.

Wed, 11/14/2012 - 10:44 | 2979612 The big unzip
The big unzip's picture

I've got gold fever!

Wed, 11/14/2012 - 12:24 | 2980032 debtor of last ...
debtor of last resort's picture

The US and Europe should go to a gold standard now. All Fort Knox gold is melted into coins now, so it can be used. Frontrun the pboc.

Wed, 11/14/2012 - 13:07 | 2980254 mh505
Wed, 11/14/2012 - 16:29 | 2981312 silverserfer
silverserfer's picture

i can see us with a 30 trillion dollar debt and still be worrying about the same stuff. dont underesitmate CIA initiated computer glitchs and how quickly this debt/assets can dissapear. Its worked well in japan for decades. It seens as though not all new debt issuance that funds federal spending gets passed onto taxpayer.  It just gets moved from one book to another, one computer to another. Poof! Bernanke is a warlock you know. 

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