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China Radio: "The U.S. And Europe Have Always Suppressed The Rising Price Of Gold"

Tyler Durden's picture




 

Sometimes, such as after pervasive liquidations in precious metals (or is that AAPL? Has it become clear yet that with widespread "quality" collateral shortages, gold and AAPL stock have become unexpected and almost interchangeable collateral replacements) it is easy to lose sight of the forest for the trees. A forest, in which the New York Fed is procuring (through the open market) the rehypothecated gold that the Bundesbank demanded for repatriation in January; in which JPMorgan's gold holdings have plunged by 75% since said stunning Bundesbank announcement and hit new record lows on a weekly basis paradoxically just as the price of spot gold keeps sliding ever lower; and in which China is importing unprecedented amounts of gold and adding more and more each month. So let's do a quick refresh on the forest, shall we.

Here is what we discovered in September 2011, as part of Bradley Manning's trove of declassified US cables. From Wikileaks:

3. CHINA'S GOLD RESERVES

 

"China increases its gold reserves in order to kill two birds with one stone"

 

"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

And now for some empirical trees.

While we don't know how much of the several hundred tons that Jens Weidmann has demanded for delivery from Liberty 33 has already been purchased and/or delivered, we know one thing: since publishing the Wikileaks disclosure China has imported nearly 2,000 tons, and just under 1,500 tons since January 2012...

... and that Chinese gold imports in 2013 continue to surpass those from 2012 "despite" the violent slide in the gold price - almost as if unlike E*trade momentum chasing babies, China buys more the lower the price drops.

In other words, China - pragmatic as always - decided to call the "rising gold price suppression" bluff of the US and Europe and do the only logical thing that takes advantage of an artificially suppressed gold price: buy hand over fist.

As for everyone else selling their (mostly paper) gold over fears that this time, unlike the previous two, Bernanke will actually stop monetizing debt and in the process eliminate all concerns of monetary collapse, China is happy to wave it in (and why not: it is only a matter of time before the taper makes way for the untaper).

Finally, we concluded our previous post looking at recent gold technicals with the following rhetorical question:

Someone more inquisitive than us may wonder: just where is all this gold being "withdrawn" to...

Rhetorical, because we have a very good idea where this gold is going.

 

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Sun, 07/07/2013 - 11:07 | 3728104 Donewidit
Donewidit's picture

So, what happens if you hold gld in USD? Seems that chinese Gld could take off but not USD gld.

Sun, 07/07/2013 - 11:16 | 3728120 Quaderratic Probing
Quaderratic Probing's picture

I have a basement full of gold and you have a tank in my front yard. Can you calculate the most valuable asset?

Sun, 07/07/2013 - 11:18 | 3728123 villainvomit
villainvomit's picture

 "According to China's National Foreign Exchanges Administration China's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries

WTF >

Sun, 07/07/2013 - 12:52 | 3728210 Jorgen
Jorgen's picture

According to China's National Foreign Exchanges Administration China's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries.

"If you cannot touch it, you don't own it." If it is going to take 7 years for Germany to repatriate her 300 tonnes of gold, how long it is going to take for the Chinese to repatriate theirs? 300 years? I wonder where Russia keeps her gold? Moscow or New York and London?

Sun, 07/07/2013 - 11:40 | 3728141 WallowaMountainMan
WallowaMountainMan's picture

gold as a paper money backing device is meaningless. any country can claim 'gold backed' but can also change its mind if it wants or needs to. no country will ever start delivering molecules of gold upon demand in exchange for paper or electronic money. it is self-defeating.

if people want to barter with gold, that barter will reflect the paper value of gold otherwise one of the parties involved in the barter will just use paper.

in inflationary/deflationary times gold will still reflect the paper value the 'market' sets for both gold and the item sought for exchange.

 

 

Sun, 07/07/2013 - 12:08 | 3728168 LiquidityandLunacy
LiquidityandLunacy's picture

So just throwing this out there but what if instead if stealthily acting, china just up and bought 500 billion worth from various sources. Then what?

Sun, 07/07/2013 - 12:40 | 3728208 loveyajimbo
loveyajimbo's picture

think China is telling the truth about ANYTHING?  Why would they? they let NONE of the gold mined in China out... and do not report those increases... Russia is hoarding too... and look at India, fighting against gold right out in the open... sort of like the US... they both know that gold vs their trash currencies is a no-brainer...  wonder if India has an asshole like gensler to facilitate the supression... back to China... as soon as the multiple trading hubs are in place (soon) they will simply bypass the dollar totally and it will collapse.  Read Jim Willie

Sun, 07/07/2013 - 13:14 | 3728245 Joebloinvestor
Joebloinvestor's picture

The western nations and the US have this covered.

As soon as it gets to the dollar turning to shit, any westerner owning gold who tries to convert or cash it in, they are gonna get hit with a "redemption" tax.

 

BET ON IT.

 

That will also result in a shadow economy based on precious metals that Treasury will use the SS & FBI to harass and destroy.

 

 

Wheeeee!

 

Sun, 07/07/2013 - 14:58 | 3728527 Unpopular Truth
Unpopular Truth's picture

Clarification: The leak is not from 4/28/2009, 4 years ago. At the time, the price was close to $900

Sun, 07/07/2013 - 15:24 | 3728602 Lmo Mutton
Lmo Mutton's picture

The ONLY way obummer can hand over America to the Russians and Chinese is to first destroy it from the inside.

Sun, 07/07/2013 - 16:04 | 3728695 JethroTull
JethroTull's picture

Gold prices have dropped. You are all too weird. Just read the Atlantic all you DERPS. We;'re not Mugabe subjects.

 

http://www.theatlantic.com/business/archive/2013/07/the-derp-and-fall-of...

 

Cranks. It's also been a bull market for crackpot economists the past few years. Now, so-called Austrian economists did do a good job predicting the housing bubble during the boom, but they could hardly have done a worse job during the bust. They've looked at the Fed's ballooning balance sheet, and screamed that Zimbabwe is coming, Zimbabwe is coming! Well, it hasn't, and it won't. But that hasn't deterred the Austrians: they think the price of gold shows the "true" inflation from the monetary base expanding, so they've been right all along. But what about now? Gold is down 24 percent from a year ago, and 36 percent from its August 2011 highs -- and that despite more "money-printing" by the Fed. Where's the inflation now? (And, sorry Austrians, an increase in the monetary base doesn't count if there's no increase in prices).

Sun, 07/07/2013 - 16:04 | 3728696 JethroTull
JethroTull's picture

Gold prices have dropped. You are all too weird. Just read the Atlantic all you DERPS. We;'re not Mugabe subjects.

 

http://www.theatlantic.com/business/archive/2013/07/the-derp-and-fall-of...

 

Cranks. It's also been a bull market for crackpot economists the past few years. Now, so-called Austrian economists did do a good job predicting the housing bubble during the boom, but they could hardly have done a worse job during the bust. They've looked at the Fed's ballooning balance sheet, and screamed that Zimbabwe is coming, Zimbabwe is coming! Well, it hasn't, and it won't. But that hasn't deterred the Austrians: they think the price of gold shows the "true" inflation from the monetary base expanding, so they've been right all along. But what about now? Gold is down 24 percent from a year ago, and 36 percent from its August 2011 highs -- and that despite more "money-printing" by the Fed. Where's the inflation now? (And, sorry Austrians, an increase in the monetary base doesn't count if there's no increase in prices).

Sun, 07/07/2013 - 17:18 | 3728908 ncdirtdigger
ncdirtdigger's picture

I forget, what da Chinese plant to take over America?

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