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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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Mon, 03/04/2013 - 08:54 | 3297328 HD
HD's picture

Good luck with delivery...

Mon, 03/04/2013 - 09:05 | 3297344 Pladizow
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!

 

Mon, 03/04/2013 - 09:34 | 3297404 Pinto Currency
Pinto Currency's picture

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

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

Mon, 03/04/2013 - 09:45 | 3297434 Pladizow
Pladizow's picture

Correct math.

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

Mon, 03/04/2013 - 09:48 | 3297443 Pinto Currency
Pinto Currency's picture

 

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

Mon, 03/04/2013 - 10:00 | 3297464 sessinpo
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?

Mon, 03/04/2013 - 10:07 | 3297485 new game
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

Mon, 03/04/2013 - 10:10 | 3297494 Pinto Currency
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

Mon, 03/04/2013 - 10:28 | 3297533 eclectic syncretist
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!

Mon, 03/04/2013 - 10:35 | 3297565 Pinto Currency
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

 

Mon, 03/04/2013 - 13:47 | 3298219 Gazooks
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. 

Mon, 03/04/2013 - 23:25 | 3299851 GtownSLV
GtownSLV's picture

Comex would just settle in dollars anyway...

Mon, 03/04/2013 - 10:14 | 3297502 BlackMagician
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

Mon, 03/04/2013 - 11:49 | 3297799 Manthong
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.

Mon, 03/04/2013 - 11:30 | 3297728 Alpo for Granny
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.

Mon, 03/04/2013 - 15:21 | 3298518 Antifaschistische
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.

Mon, 03/04/2013 - 09:07 | 3297350 smlbizman
smlbizman's picture

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

Mon, 03/04/2013 - 09:39 | 3297418 rogeliokh
rogeliokh's picture

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

Mon, 03/04/2013 - 10:02 | 3297471 new game
new game's picture

free market early - then the takedown via paper.

new  normal until perm backwardian, then buy amap.

Mon, 03/04/2013 - 08:55 | 3297330 fonzannoon
fonzannoon's picture

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

Mon, 03/04/2013 - 08:58 | 3297334 HD
HD's picture

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

Mon, 03/04/2013 - 10:55 | 3297621 DaveyJones
DaveyJones's picture

democracy is golden

and oily

Mon, 03/04/2013 - 08:57 | 3297331 GetZeeGold
GetZeeGold's picture

 

 

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

Mon, 03/04/2013 - 08:59 | 3297335 q99x2
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.

Mon, 03/04/2013 - 09:25 | 3297383 augustusgloop
augustusgloop's picture

who's face is on the trillion bill? 

Mon, 03/04/2013 - 09:48 | 3297442 Rubicon
Rubicon's picture

Mickey Mouse

Mon, 03/04/2013 - 10:03 | 3297473 new game
new game's picture

AMAP

Mon, 03/04/2013 - 11:09 | 3297662 post turtle saver
post turtle saver's picture

Groucho Marx, costumed for 'Duck Soup'

Mon, 03/04/2013 - 19:45 | 3299311 thisandthat
Mon, 03/04/2013 - 19:40 | 3299294 thisandthat
thisandthat's picture

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

Mon, 03/04/2013 - 09:01 | 3297337 Sheeple Shepard
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

Mon, 03/04/2013 - 09:09 | 3297355 negative rates
negative rates's picture

I think it should read more like "sorry YOU can't find your own saftey deposit box with your gold in it". I have often said that if your family  buried PM's in the past, that it now is your job to keep track of them. Soon as you don't, it's now finders keepers. 

Mon, 03/04/2013 - 11:16 | 3297671 DblAjent
DblAjent's picture

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

Mon, 03/04/2013 - 09:05 | 3297339 JustObserving
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.

Mon, 03/04/2013 - 09:02 | 3297340 Sudden Debt
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...

 

Mon, 03/04/2013 - 10:55 | 3297628 DaveyJones
DaveyJones's picture

until they shut down your computer 

Mon, 03/04/2013 - 09:02 | 3297341 fonzannoon
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

Mon, 03/04/2013 - 09:41 | 3297419 Colonel Walter ...
Colonel Walter E Kurtz's picture

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

Mon, 03/04/2013 - 10:12 | 3297497 new game
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....

Mon, 03/04/2013 - 12:40 | 3297996 SkottFree
SkottFree's picture

I love Bubba WaWa

Mon, 03/04/2013 - 14:24 | 3298336 Jones79
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.  

Mon, 03/04/2013 - 09:08 | 3297351 Quinvarius
Quinvarius's picture

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

Mon, 03/04/2013 - 09:19 | 3297369 Ghordius
Ghordius's picture

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

Mon, 03/04/2013 - 09:21 | 3297370 NoWayJose
NoWayJose's picture

And offer to store it for them too!

Mon, 03/04/2013 - 10:49 | 3297605 GlobalCtzn
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....................

Mon, 03/04/2013 - 10:58 | 3297634 DaveyJones
DaveyJones's picture

plan B involved building a tunnel longer than their wall

Mon, 03/04/2013 - 09:26 | 3297388 Ghordius
Ghordius's picture

selling multiple times has a name: pre-vaporize

Mon, 03/04/2013 - 09:08 | 3297352 Fix-ItSilly
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.

Mon, 03/04/2013 - 09:17 | 3297363 MeMadMax
MeMadMax's picture

Do or die.

Question the man and disappear....

Mon, 03/04/2013 - 09:33 | 3297402 augustusgloop
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.

Mon, 03/04/2013 - 10:12 | 3297498 Mr. Hudson
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.

Mon, 03/04/2013 - 15:47 | 3298593 theprofromdover
theprofromdover's picture

One good thing about the current corrupt courts system is that, when the time comes, they will perhaps re-set these public sector and corporate pensions without bothering with the law.

A bit of wishin' & hopin' I know.

Mon, 03/04/2013 - 09:14 | 3297360 eigenvalue
eigenvalue's picture

Forget about China or India. Gold and silver are on their way to zero and all the goldbugs and silverbugs will be exterminated 

Mon, 03/04/2013 - 09:17 | 3297364 Sheeple Shepard
Sheeple Shepard's picture

The only thing headed to zero is the currency's that said gold and silver are valued in.

Mon, 03/04/2013 - 09:18 | 3297366 Ghordius
Ghordius's picture

mmhhh... have you aquired a taste in trolling? if yes: LOL

but one caveat: gold and silver are for strong hands - if by "bugs" you mean overexposed and (over-)leveraged, than: yes, possible

Mon, 03/04/2013 - 09:29 | 3297390 negative rates
negative rates's picture

If I read that right, he was speaking for hisself only.

Mon, 03/04/2013 - 12:13 | 3297570 Broomer
Broomer's picture

Yes, you need to have strong hands with precious metals.

First of all, if you didn't assure that you have a source of food for your plate, you are doing it wrong. The landscape is littered with the corpses of PM savers that slowly sold all their stash to survive.

You need to pretend that your PMs do not exist. If you start to spend them, "just a little", sooner or later it will be all gone. Do not touch it. Do. Not. Touch. It.

Government can confiscate it? Yes. 90% selling taxes? Possible. You won't be able to cash it anonymously if digital currency is fully implemented? Who knows. Anyway, those things will pass. It can take decades, perhaps even centuries. Gold and silver coins became essentially worthless for hundreds of years in the West after the collapse of the Western Roman Empire.

Precious metals are generational savings. The kind of thing that gets passed for your descendants for many, many generations.

Even the Rothschilds. many years ago, began their fortune with one of them acquiring the first gold coin for the family.

Keep stacking, and good luck for all of you.

Mon, 03/04/2013 - 09:23 | 3297377 NoWayJose
NoWayJose's picture

That hedge funds and money managers have increased their net long positions for the first time in four weeks is a good sign for a bottom here. It shows that those buyers see these prices as attractive.

Mon, 03/04/2013 - 09:26 | 3297387 kurzdump
kurzdump's picture

Every asset is on its way to zero "on a long enough timeline". Fiat money will be long gone and forgotten when the last human on earth dies.

Mon, 03/04/2013 - 10:32 | 3297551 eclectic syncretist
eclectic syncretist's picture

Put you money where you mouth is eigenvalue and sell some gold/silver calls.  Better yet, I'll sell you all the zero puts you want to buy.  How many would you like?  I'll take as little as $0.01 each.

Mon, 03/04/2013 - 09:21 | 3297371 eddiebe
eddiebe's picture

Chinas leaders are playing fiat games as much as our scum pigmen.

Mon, 03/04/2013 - 09:23 | 3297376 yrbmegr
yrbmegr's picture

"China’s foreign currency reserves...are now enough to buy every central bank’s official gold supply -- twice."  No they're not.  Of course.

Mon, 03/04/2013 - 09:36 | 3297408 ATM
ATM's picture

Let them try to buy it for a paltry $3.3 Trillion. They'll never be able to buy it all for that amount. 

Mon, 03/04/2013 - 12:00 | 3297826 lasvegaspersona
lasvegaspersona's picture

try:

they'll never be able to buy any for that amount....once it bacame obvious they were making a bid....

Mon, 03/04/2013 - 09:54 | 3297452 Mercury
Mercury's picture

How do you say "shit for shine" in Mandarin?

Mon, 03/04/2013 - 10:00 | 3297467 Monedas
Monedas's picture

BS, the price would skitter away like a drop of mercury in a salad bowl !

Mon, 03/04/2013 - 10:16 | 3297513 Mr. Hudson
Mr. Hudson's picture

Food. China's problem is making sure that the Chinese not only have enough to eat, but that food is affordable. The Chinese government stockpiles gold for the same reason gold bugs do: a hedge against inflation. But the Chinese government is more concerned about food reserves than gold reserves.

Mon, 03/04/2013 - 10:24 | 3297528 Broomer
Broomer's picture

I wonder how much of Chinese reserves are actually physical bullion marked to market.

Is there any report on the composition of Chinese reserves? How much is in euros, etc?

Mon, 03/04/2013 - 11:07 | 3297659 Mr. Hudson
Mr. Hudson's picture

We don't even know how much gold the U.S. government actually possesses, so how would anybody know what the Chinese government has? It’s anybody’s guess.

Mon, 03/04/2013 - 10:27 | 3297532 Broomer
Broomer's picture

Regarding "Looming Gold Production Cliff That Will Drive Prices Higher", recently we had an example of this. Bitcoins.

Mining difficulty for bitcoins increased recently. It is my personal opinion that the recent high prices were caused by lack of liquidity.

Mon, 03/04/2013 - 10:28 | 3297537 BlackMagician
BlackMagician's picture

China was economically destroyed during Great Depression...they almost came through unscathed due to being on silver standard...they have seen this movie before...

 

I see history repeating itself...

 

 

SILVER PURCHASE ACT OF 1934

Mon, 03/04/2013 - 10:29 | 3297541 mick_richfield
mick_richfield's picture

 

China's FX Reserves Could Buy All World's Gold Twice

No problemo. The west has central banks that have proven their ability and willingness to sell the same gold a heck of a lot more than twice.

And ... would you like some silver with that?

Mon, 03/04/2013 - 10:40 | 3297575 Pumpkin
Pumpkin's picture

Yeah, I'd say about 2-300 billion into it, the price may jump a little.

Mon, 03/04/2013 - 11:04 | 3297653 Kirk2NCC1701
Kirk2NCC1701's picture

So, they (like the Fed) can afford to beat up on the price of paper-gold, and buy the real thing real cheap on the open market, to the extent that it's available, and JPM is forced to play the same game -- or take delivery via its tunnels to CB vaults (London, NY).  Cute.  Plan accordingly.

Mon, 03/04/2013 - 11:05 | 3297656 devo
devo's picture

gold is dead, long live gold

Mon, 03/04/2013 - 11:30 | 3297725 Edward Fiatski
Edward Fiatski's picture

Who is going to sell it to them? That is the question.

Mon, 03/04/2013 - 15:00 | 3298454 sdmjake
sdmjake's picture

I would...but, alas, I lost it on a recent canoe outing.

Mon, 03/04/2013 - 11:46 | 3297791 Kirk2NCC1701
Kirk2NCC1701's picture

Sung to the tune of "There's no business like show busines"...

There's no business like gold business like no business I know
Everything about it is appealing, everything that traffic will allow
Nowhere could you get that happy feeling when you are stealing that golden cow.

There's no people like gold people, they smile when gold prices are low
Even with tons bill-notes that you know will fold, you may be stranded out in the cold
Still you will change it for a sack of gold, let's go on with the show.

Mon, 03/04/2013 - 11:55 | 3297812 lasvegaspersona
lasvegaspersona's picture

What would happen if China decided to buy gold on the market? 1980 is what would happen.

So how are they getting as (nearly as) much gold as GLD holds in one year?

The stock (the 170,000 tons) doesn't matter. It is only the flow  (the amount that can be cut loose from those who aldreay hold it) that counts.

What happens when the last man with an ounce says...."ya know, I'm really not interested in selling at anywhere near this price.?

Mon, 03/04/2013 - 13:10 | 3298097 GFORCE
GFORCE's picture

This article is pointless.

Mon, 03/04/2013 - 14:08 | 3298291 WhiteNight123129
WhiteNight123129's picture

Well that is counting only the on-balance sheet debt. If you count unfunded liabilities, where are we?

Do NOT sell your Gold.

 

Mon, 03/04/2013 - 15:29 | 3298521 web bot
web bot's picture

I posted this in the past, but will do so again...

In 300 years, when world history books are written in Mandarin, the war on the West will be textbook study for how to use an enemy's perceived strength against itself. It will also likely be mentioned that the writings of Sun Tzu were not heeded. They'll also mention the tell tale signs of social decadence and moral filth, which always precede the decline of an empire. Niall Ferguson may also get a footnote mention, as someone who was not heeded.

 

Mon, 03/04/2013 - 17:01 | 3298841 U4 eee aaa
U4 eee aaa's picture

I always thought the history books would be written in Jamaican 300 years from now.

Mon, 03/04/2013 - 16:59 | 3298832 U4 eee aaa
U4 eee aaa's picture

That last ounce is going to be reeeeeeeealy expensive. There is always one guy that sets his trade price at a trillion dollars

Mon, 03/04/2013 - 17:38 | 3299012 RiverRoad
RiverRoad's picture

And one day China will buy JPM twice.

Tue, 03/05/2013 - 02:24 | 3300094 PADRAEG
PADRAEG's picture

not a bad article, charts need to be higher resolution or larger, and extend further back in time

 

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