Chart Of The Day: China’s $3.3 Trillion FX Reserves Could Buy All World’s Gold Twice

Tyler Durden's picture

From GoldCore

China’s $3.3 Trillion FX Reserves Could Buy All World’s Gold Twice

Today’s AM fix was USD 1,578.00, EUR 1,214.13 and GBP 1,049.06 per ounce.
Friday’s AM fix was USD 1,570.00, EUR 1,203.99 and GBP 1,043.74 per ounce.

Silver is trading at $28.75/oz, €22.11/oz and £19.20/oz. Platinum is trading at $1,584.25/oz, palladium at $719.00/oz and rhodium at $1,200/oz.

Gold fell $4.80 or 0.,31%% on Friday in New York and closed at $1,575.60/oz. Silver surged to a high of $28.77 in early New York trade before it also fell back off, finishing with a gain of 0.28%. Gold was off 0.31% for the week while silver was down 0.66%.


Cross Currency Table – (Bloomberg)

Gold inched higher in all currencies today supported by physical buying in Asia.

Concerns about the global economy and the outlook for riskier assets have led to renewed physical buying interest in Asia, particularly in China. The increasingly popular gold forward contract on the Shanghai Gold Exchange stood at 320 yuan a gram by 0741 GMT according to Reuters, or $1,600/oz. This is a healthy premium of about $23 to spot gold.

Investors are waiting to see the impact of the spending cuts, known as the "sequester", although the $85 billion cuts are a tiny fraction of the U.S. government's total spending of $3.7 trillion and show the U.S. looks incapable of tacking its very precarious financial position.

Hedge funds and money managers increased their net long positions in gold in the week to February 26 from a more than four-year low hit a week earlier. Those lows are very bullish from a contrarian perspective and a gradual increase in speculative longs in the coming weeks seems very likely.

In contrast to a sharp decline in speculative interest in futures and options over the past month, sales of American Eagle gold coins rose sharply in February on the year, and silver coin sales in the form of one ounce Silver Eagles posted their strongest performance for the month since 1986.


Gold in Dollars (01/01/10 to Today) – (Bloomberg)

China’s foreign currency reserves have surged more than 700% since 2004 and are now enough to buy every central bank’s official gold supply -- twice.

The Bloomberg CHART OF THE DAY shows how China’s foreign reserves surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012.

The price of gold has failed to keep pace with the surge in the value of Chinese and global foreign exchange holdings. Gold has increased just 263% from 2004 through to February 28, with the registered volume little changed, according to data based on International Monetary Fund and World Gold Council figures.

By comparison, China’s reserves rose 721% through 2012, while the combined total among Brazil, Russia and India rose about 400% to $1.1 trillion.

Continuing diversification into gold from the huge foreign exchange reserves by the People’s Bank of China and other central banks is a primary pillar which will support gold and should contribute to higher prices in the coming years.

NEWS

Gold prices firm on Asia buying, upbeat US data weighs - Reuters

Gold Snaps Three-Day Decline as Data Signals Extended Stimulus - Bloomberg

Greek Central Bank Says Gold Reserves Worth 4.7 Billion Euros – Business Week

Rhodium Beating Platinum to Palladium on Car Sales - Bloomberg

COMMENTARY

Silver – Visualized in Bullion Bars – Demon Ocracy Info

Looming Gold Production Cliff That Will Drive Prices Higher – Money Morning

Hedging Funds And Physical Vs Paper Gold – Zero Hedge

No doubt at all that the price of gold is going to and through $3,500/oz – JS Mineset

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HD's picture

Good luck with delivery...

Pladizow's picture

 

"China’s $3.3 Trillion FX Reserves Could Buy All World’s Gold Twice"

 

Yet China's reserves can only buy 0.000000000000000000001% of the worlds "paper gold" supply!

 

Pinto Currency's picture

There's 170,000 tonnes of gold above ground.

That's ~5 billion oz. or $7.5 trillion.

Pladizow's picture

Correct math.

Discrepency between title and body, which says: "....enough to buy every central bank’s official gold supply -- twice."

Pinto Currency's picture

 

A more interesting story would be : "There's $100 trillion in the world's bond market"

sessinpo's picture

No a more interesting story that actually relates to the thread is:

"So why haven't they?"

 

Think about it. We know they and others are accumulating gold. They don't have to deal with paper as Pladizow mentioned.Since things are currently at extremes where you can't get physical gold at all, why wouldn't they just buy physical gold. Heck, even at retail, you can still get an ounce of gold at $1653/oz retail (Apex as of today).

 

Why hold dollars? We all know fiat is crap. Don't you think they are smart enough to know that too?

new game's picture

drive up the cost

erode faith in system they are very vested-the very funds used could become worthless

chaos

better to do it stealth as they fleece amerika

Pinto Currency's picture

The answer is "they can't do it quickly, but they have been buying over the past 15 years".

A fraction of the world's gold is available to markets and the gold and silver markets are increasingly illiquid:

http://www.kitco.com/market/lfrate.html

eclectic syncretist's picture

If they did it quickly, as in buying out the COMEX right now, this moment, taking delivery and shipping it all to China, that might cause a little diplomatic friction, don't you think?

Besides, by doing it this way, by stealth, small investors get an opportunity to go along for the ride.  That opportunity is enhanced by our central banks interest in suppressing the price for as long as possible.  At some point though, in a highly secretive/manipulated situation like this, things will snap back to their real value quickly.  I have no way of knowing when that might be, but it will happen, and I'm happy about it because I'm in for the ride!

Pinto Currency's picture

 

The Comex is not a real market for pricing or securing physical - see rule 7B01:

http://www.cmegroup.com/rulebook/NYMEX/1/7B.pdf

Also rule 230k:.

http://www.cmegroup.com/rulebook/NYMEX/1/2.pdf

 

Gazooks's picture

7B14.

Chapter 7B


FAILURE TO DELIVER

In the event a clearing member fails to fulfill its specific delivery obligations pursuant to Exchange rules, in connection with a product listed for trading and clearing or for clearing-only by the NYMEX Division or the COMEX Division, the sole obligation of the Clearing House is to pay reasonable damages proximately caused by such delivery obligation failure, in an amount which shall not exceed the difference between the delivery price of the specific commodity and the reasonable market price of such commodity at the time delivery is required according to the rules of the Exchange. The Clearing House shall not be obligated to: (1) make or accept delivery of the actual commodity; or (2) pay any damages relating to the accuracy, genuineness, completeness, or acceptableness of certificates, instruments, warehouse receipts, shipping certificates, or other similar documents; or (3) pay any damages relating to the failure or insolvency of banks, or (4) laugh hysterically at fuck-faced morons stupid enough to do buisness with us in the expectation of receiving actual good delivery bar bullion. 

GtownSLV's picture

Comex would just settle in dollars anyway...

BlackMagician's picture

"So why haven't they?"

 

Speculating here...they may not want the prices to be "off to the races" just yet...buying at $1653 is better than at $10,000...just sayin

Manthong's picture

"So why haven't they?"

Because they are not ready or willing to fight the real war that will happen if they do.. yet.

This is where your game theory really counts.

Alpo for Granny's picture

Remember..you want to shear the sheep, not slaughter it.

In due time, it will be on the dinner table.

Antifaschistische's picture

All they really need to do is purchase a few of the South African Mines.....and repatriate all output.   That's all it would take.   Game Over.

smlbizman's picture

ah,...excuse me...can someone point me to the "fuck you buffet" area?

fomcy's picture

8:20 AM GOLD/SILVER takedown show.. F*cking fraudsters!

new game's picture

free market early - then the takedown via paper.

new  normal until perm backwardian, then buy amap.

fonzannoon's picture

I heard it's seven years for delivery....

HD's picture

I think that only applies to countries where America has troops stationed...

DaveyJones's picture

democracy is golden

and oily

GetZeeGold's picture

 

 

Ben Shalom will continue to fund China's gold reserves.....only fair since we screwed them out of all that money.

q99x2's picture

I wouldn't sell mine for 3.3 trillion. They'll be printing trillion dollar bills in a year or two and I'd be stuck with worthless paper.

augustusgloop's picture

who's face is on the trillion bill? 

thisandthat's picture

I'm cheap, so they could buy mine IF they doubled the price AND i could buy more back.

Sheeple Shepard's picture

Check this out for a sign of things to come

"Sorry, we cant find your safety deposit box with your gold in it"

 

http://www.bbc.co.uk/news/uk-england-birmingham-21638048

DblAjent's picture

ya...that's why I have my very own personal one at my house .

JustObserving's picture

And China can buy all the world's silver 140 times over.

But the CFTC will allow you to naked short all the world's gold thrice for just about no money.  Who needs real assets when you have corruption on your side? Just ask Corzine.

Sudden Debt's picture

Why buy gold when you can just see trillions and trillions of dollars on your LCD screen... untill you shut down the computer off course...

 

DaveyJones's picture

until they shut down your computer 

fonzannoon's picture

for those who missed it last night. This was good stuff.

"Unlike our market driven economy" LOL.

http://www.businessinsider.com/60-minutes-chinas-ghost-cities-2013-3

Colonel Walter E Kurtz's picture

But..but.....it is infrastructure mal-investment and good for the economy!

new game's picture

when it don't make sense there is an obvious answer.

complete control economy

can it go on?

why not if there is no market forces

dr. shalom can explain better than me....

Jones79's picture

wow, thanks for sharing.  this is the other side of the global debt bubble, an asset bubble of real estate unlived in.  funny that all we have to show for ourselves is debt slavery here and unused housing on the other side of the globe, fueled by unrealistic gamblers.  

Quinvarius's picture

And JPM would probably sell it all to them...twice.

Ghordius's picture

Jamie doesn't make more money than everybody else by selling it all to them twice... only.

NoWayJose's picture

And offer to store it for them too!

GlobalCtzn's picture

And THAT is where JPM will really clean up. I cannot imagine any fool on this planet storing their phyzz in the Morgue. But many do and will....................

DaveyJones's picture

plan B involved building a tunnel longer than their wall

Ghordius's picture

selling multiple times has a name: pre-vaporize

Fix-ItSilly's picture

Another faulty analysis of China that begins with the premis that China is a constitutional republic.  There is not "private wealth" in China as it is known in the West.  Therefore, "foreign currency reserves", "monetary reserves", "sovereign wealth", bank reserves, etc. in China should not be viewed as they are in the West.  For Western analysts, China is like Argentina as it travelled from the '90s to bankruptcy in the '00s. I don't claim they go bankrupt, but Western analysts have poorly understood what is wealth, reserves, liabilities and assets for the Reds.  China has a lot less "reserves" and "assets" than one thinks as it is offset with huge misallocations of capital best symbolized by ghost cities.  And ghost cities are poorly understood, as they do not represent just misallocation of capital and bad loans, but of the rotten core of the Chinese governing system that needs these crony "private" constructions and their complementary public works projects to claim and distribute graft.

MeMadMax's picture

Do or die.

Question the man and disappear....

augustusgloop's picture

thought you were talking about the US + QE. Except we are much more efficient. Misallocation of capital? hello, us buying up all the shit debt of the banks. Ghost cities? Detroit, Florida, Las Vegas, San Bernadino, Modesto. Corrupt provincial officials? supervisors, police chiefs, fire chiefs retiring on pensions that would require a capital base of 10,000,000 . Perhaps we will come to call Dimon + Blankfein's children princlings.

Mr. Hudson's picture

Chinese ghost cities were built with cash from investors. Very few ghost cities are burdened with the debt that currently plagues U.S. cities.