• Sprott Money
    05/06/2016 - 06:03
    The US, in its own decline, is showing this same self-destructive tendency. The worse things get, the greater the inclination of the citizenry to say, “Carry on, everything’s fine.”

"China Expected To Announce It Has More Than Doubled Its Gold Reserves", Shanghai Daily

Tyler Durden's picture




 

The topic of China's below the radar accumulation of gold is nothing new: first revealed here in September 2011 as part of a Wikileaks intercept, watchers of Chinese gold imports have been stunned by the ravenous pace with which Chinese customers have been gobbling up both domestic and foreign gold production month after month. One needs merely to glance at the net imports of gold just through Hong Kong to get a sense of just how much gold has flowed into the country which has now surpassed India as the largest buyer of gold.

But the biggest question mark since 2009, when China gave its last official gold holdings update, has been how much gold has the People's Bank of China accumulated. One thing is certain: it is well more than the official number of just ovef 1000 tons.

Recall the confidential memo revealed through Wikileaks:

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.

In other words, between 2009 and 2011, China's gold reserves had increased according to internal data. One can assume they have increased substantially since then, however the PBOC, judiciously, has refused to provide an updated amount of its gold holdings for five years in a row: after all why buy at higher prices (if the world knows that the PBOC is buying at any price), when it can buy cheaply?

However, the period of stealth - and cheap - accumulation may be ending. At least according to the largest English-language portal in East China: Shanghai Daily.

The website, which cites an analysis by Jeffrey Nichols of American Precious Metals Advisors, reports that the Chinese central bank is about to announce its gold holdings have nearly tripled from 1054 tons to 2710 tons.

From Shanghai Daily:

China may soon announce an increase in its official gold reserve from 1,054 tons to 2,710 tons, Jeffrey Nichols, managing director of American Precious Metals Advisors, said.

 

The People’s Bank of China has not reported any increase in official gold holdings since 2009, when the central bank said the official reserve was at 1,054 tons, which accounted for only about 1 percent of its multi-trillion foreign exchange reserves.

 

The PBOC has been “surreptitiously” adding to its official gold reserves. It has bought a total of 654 tons in 2009 through 2011, another 388 tons in 2012, and more than 622 tons last year, mostly from domestic mine production and secondary supplies, Nichols said in a commentary posted on NicholsOnGold.com yesterday.

 

Central bank purchases comprise the smallest fraction of global gold demand — less than 10 percent.

 

“If China announces an increase in gold reserves, there would be an immediate drag-up force in the gold market,” Albert Cheng, managing director of the industrial association World Gold Council for the Far East, told Shanghai Daily.

 

China is the biggest gold consumer and producer in the world.

 

Combined demand in China in the first three quarters amounted to 821 tons and the demand for the whole last year is expected to exceed 1,000 tons, according to the council’s earlier statements.

Oh well: the period of quiet accumulation was fun while it lasted.

That said, we for one would be happy if Nichols is wrong, and if the PBOC were not to announce any time soon it has become the fourth (or third, or second) largest official holder of gold in the world. Because unlike clueless, momentum-chasing traders everywhere, it is always better to buy lower than higher: a concept which the entire Western "developed" markets and the HFT algos and sophisticated "hedge fund" investors that trade them, have either forgotten or never grasped to begin with.

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Sun, 01/19/2014 - 20:05 | 4346946 SoilMyselfRotten
SoilMyselfRotten's picture

There is such a big move coming

Sun, 01/19/2014 - 20:09 | 4346956 knukles
knukles's picture

Hah ha ha ha ha ha ha ha ha

Sun, 01/19/2014 - 20:52 | 4347049 Boris Alatovkrap
Boris Alatovkrap's picture

Once in Western Province of Xian, Boris is see Panda. Panda is not bear like Ursula Majoris, like Polar Bear or Bear tear apart by bare hand Putin, but stinking over size spotting raccoon. China is can keep stupid Panda, gold or no gold.

Sun, 01/19/2014 - 21:19 | 4347116 jcpicks
jcpicks's picture

Panda is not a sweet & cuddly animal: It is one mean SOB. Just like the PBOC, it will soon show it's claws to take over the world's reserve status.

Get ready...time of reckoning is soon upon us.

Sun, 01/19/2014 - 21:59 | 4347203 therevolutionwas
therevolutionwas's picture

Based on Austrian ecomonics I hope, and not just going to the mountain top and waiting for the prophetized end?

Sun, 01/19/2014 - 23:12 | 4347326 Ignatius
Ignatius's picture

If they announce less than 4000 tons they're lying.

Mon, 01/20/2014 - 04:19 | 4347612 Rubicon
Rubicon's picture

Its not just about what China has. Its about what the US no longer has. Add up current holding across a basket of countries and the message is clear.

Mon, 01/20/2014 - 13:07 | 4348405 Scarlett
Scarlett's picture

I hope they present the announcement with an English and a German translation immediatelly following.  Would be very kind of them.

Mon, 01/20/2014 - 08:19 | 4347735 DanDaley
DanDaley's picture

Okay, quit pandering.

Sun, 01/19/2014 - 23:13 | 4347325 Carpenter1
Carpenter1's picture

"The Chinese government announces that it now owns 27,000, er, i mean 2700 tons of gold."

Wed, 01/22/2014 - 01:56 | 4354585 papaclop
papaclop's picture

Laugh on numbnuts. I bet it takes off soon. We shall see. I'll bet the Chinese have more than the USA.

Sun, 01/19/2014 - 20:12 | 4346963 DoChenRollingBearing
DoChenRollingBearing's picture

There are recent and persistent rumors that the Chinese official (government) holdings may clock in at some 2700 tonnes, much more than the +/- 1000 tonnes or so listed by the WGO in 2010.  Turd F, Jesse, Gold-Eagle and even Bloomberg have recent articles on China and possible upward revisions in their gold holdings.

Three links in my below article:

http://tinyurl.com/krm78h7

 

Sun, 01/19/2014 - 20:19 | 4346975 philipat
philipat's picture

China PRODUCES around 500 Tonnes of Au per year, so that's an additional 2K Tonnes since 2009 right off. Imports of Au into China have also gone through the roof in the last 3 years. I would not be at all surprised if the new Official reserve figure is 5-6K Tonnes.

Sun, 01/19/2014 - 20:44 | 4347014 DoChenRollingBearing
DoChenRollingBearing's picture

A lot of what China imports and produces does not go into its official gold reserves, for example, they even encourage their people to buy gold.  The figures I got were that China produces +/- 355 tonnes per year, but behind the Opaque Curtain, who really knows?

If they do announce a revision way up to, say, over 3500 tonnes (and so move into 2nd place, only behind the USA), then THAT would make news, not even our State Run Media could hide that.

Sun, 01/19/2014 - 20:48 | 4347035 The Shootist
The Shootist's picture

Thou doth give cnn too much credit

Sun, 01/19/2014 - 21:01 | 4347071 Lost Word
Lost Word's picture

Off Topic, a story about Lee Wanta, a 27 Trillion dollar man,

earned thru currency trading for the US Goverment,

then stolen.

Search thru several layers of links for the full story.

http://www.newswithviews.com/Barnewall/marilyn197.htm

 

Mon, 01/20/2014 - 07:41 | 4347708 Supernova Born
Supernova Born's picture

Knowledge is power.

China does not share power.

Mon, 01/20/2014 - 07:40 | 4347709 Supernova Born
Supernova Born's picture

delete

 

Mon, 01/20/2014 - 07:41 | 4347711 Supernova Born
Supernova Born's picture

wtf x who knows. Sorry

Mon, 01/20/2014 - 08:54 | 4347768 N2OJoe
N2OJoe's picture

Right on Supernova. China is waging an economic war and in the words of Sun Tzu

“All warfare is based on deception.”

Sun, 01/19/2014 - 21:46 | 4347173 Winston Churchill
Winston Churchill's picture

Wen it get selious ,you rie.

Sun, 01/19/2014 - 21:55 | 4347195 midtowng
midtowng's picture

The PBOC is taking ALL of the domestic production.

That leaves the entire rest of the Chinese economy to get their gold from foreign sources

Sun, 01/19/2014 - 22:59 | 4347310 DESMO_RR
DESMO_RR's picture

I would say 2700 would be a severe understatement. William Kaye estimates between 8-10k MT

Sun, 01/19/2014 - 21:30 | 4347142 midtowng
midtowng's picture

I wonder who is going to be surprised by this announcement?

Sun, 01/19/2014 - 20:06 | 4346948 q99x2
q99x2's picture

What you think electronic chips are made with, compressed dust?

Of course they are buying gold and will continue to. It is used for industrial purposes and jewelry.

Sun, 01/19/2014 - 20:12 | 4346962 knukles
knukles's picture

Who knows how the Chinese account for their gold (How they account for anything remains a mystery and anybody believeing any Chinese numbers is a bit tetched.) but usually "Official" gold holdings are by the Central Bank for reserve purposes and not available for commercial distribution.
They could release "Official" gold but it likewise would then count as a sale and a decrease of reserves, etc, etc, etc

Sun, 01/19/2014 - 20:55 | 4347055 disabledvet
disabledvet's picture

i agree. "they actually have a lot more gold...they just aren't telling us." ummmm "because that dude with all the gold has fled to Singapore and opened a casino so he can launder all his cash flow too?"

It's along way down the Malay Penninsula to get to Singapore Uncle Han!

Sun, 01/19/2014 - 20:29 | 4346995 Tasty Sandwich
Sun, 01/19/2014 - 20:07 | 4346952 HeavydutyMexica...
HeavydutyMexicanOfTheNorthernKingdom's picture

The PBOC needs to STFU....i'm not done buying bitchez!

Sun, 01/19/2014 - 20:32 | 4346967 Kaiser Sousa
Kaiser Sousa's picture

i suggest learning how to say that in Mandarin...

among other things like - "spare change please..."

Sun, 01/19/2014 - 20:54 | 4347052 Oldballplayer
Oldballplayer's picture

I am going to copy that. You will see me plagiarizing that all over the interwebs.

Sun, 01/19/2014 - 21:17 | 4347110 Kaiser Sousa
Kaiser Sousa's picture

all good...consider it open source...

Sun, 01/19/2014 - 21:30 | 4347141 RafterManFMJ
RafterManFMJ's picture

I just bought a way cool carbon fiber Rickshaw; I'm ready for next career pulling Middle Class Chinese tourists around my hometown.

I go faster, yes? You like!

Mon, 01/20/2014 - 02:44 | 4347552 Uchtdorf
Uchtdorf's picture

Yeah, that and "Yu wan flies widdat?"

Sun, 01/19/2014 - 20:40 | 4347015 Greenskeeper_Carl
Greenskeeper_Carl's picture

im in the same boat, but i wouldnt worry, even if they announce some larger than expected number, it might breifly spike, but there will be the ubiquitous early morning smack down to take care of that. This doesnt in any way put a stop to the 100x leveraged paper games that will continue to take place

Sun, 01/19/2014 - 21:16 | 4347105 Kaiser Sousa
Kaiser Sousa's picture

paper games are being rendered irrelevant...

know what ur holding and keep stackin at the discount the MoneyChangers r providing u with...

Sun, 01/19/2014 - 20:26 | 4346969 JPMorgan
JPMorgan's picture

" That said, we for one would be happy if Nichols is wrong "

Yeah damn, I mean that's good news and bad news all at the same time. :-/

Well it's not been officially announced by the PBOC, so it's just a observation until that time I guess.

April? 


Sun, 01/19/2014 - 20:21 | 4346979 Seasmoke
Seasmoke's picture

Wi Tu Lo !!!!!!!!!!!!!!!!!!!!!

Sun, 01/19/2014 - 20:29 | 4346991 Hulk
Hulk's picture

Those godless Celestials hoarding that most barbaric of metals !!!

Got Milk ???

Sun, 01/19/2014 - 22:28 | 4347260 Save_America1st
Save_America1st's picture

Got Ag??? ;-)

Mon, 01/20/2014 - 02:15 | 4347544 Colonel Klink
Colonel Klink's picture

I thought Swearengen was supposed to say that line!

Sun, 01/19/2014 - 20:29 | 4346993 Greenskeeper_Carl
Greenskeeper_Carl's picture

doesnt this just account for inports? and we have no idea how much they have mined domestically, which as far as i know, all domestically mined gold stys in the country. I dont really believe any number the chinese govt puts up (just like i don't belive what the US gov says we have in fort knox) but arent they likely to have far more than what they have officially inported?

Sun, 01/19/2014 - 20:30 | 4346999 MrVincent
MrVincent's picture

I would love to see in person what a 1000 tons of gold looks like. Probably heaven!

Sun, 01/19/2014 - 20:56 | 4347064 Conax
Conax's picture

Let's see, a metric ton of gold = 51,762 cc, or 3,158.7 cu in-

A cubic foot = 1,728 cubic inches, so a ton is 1.828 cu ft, X 1000 tons..

A thousand metric tons would form a cube about 12.2 feet on a side.  About the size of a garden shed.

That's some heavy shit.

Sun, 01/19/2014 - 20:39 | 4347011 jonjon831983
jonjon831983's picture

Who knows when the revelation will actually be? If soon, around Chinese New Year when everybody is on holiday Jan 31, 2014 to Feb 6, 2014? Maybe they'd see it as good luck and fortune at that time?

Or pick your own fav holiday revelation date! http://www.timeanddate.com/holidays/china/

Sun, 01/19/2014 - 21:04 | 4347088 Urban Redneck
Urban Redneck's picture

This is part of a much bigger operation involving catalysts and reactions. So what is the catalyst for the announcement, or what the announcement supposed to be a catalyst for?

Luck and fortune are for cookies, so Comex, LBMA, IMF & BIS quota/bylaws what's the next step??? Unless there is a planned next step, there is simply NO point in disclosing updated holdings now.

Shanghai Daily cites NicholsOnGold who "hear[s] that the country’s central bank will soon announce..." That's bush league strategery. However, one thing I have witnessed the Chinese MIC do is plant news stories in an attempt to drive a specific Government outcome (witnessed in the context of "persuading" other governments, not their own) but with competing factions within a single party hierarchy, who's to say? (And not like it isn't done daily in the single party hierarchy of the USSA).

Sun, 01/19/2014 - 21:16 | 4347104 jonjon831983
jonjon831983's picture

Quite, one could come up with a slew of bullish "theories" of when and why something may occur.

Suddenly, within our little scope is all this "pro-gold" news.  Gold company acquisitions... manipulations.

Or perhaps we really aren't being taken for a pump and dump ride and things are getting tight at the seams enough so that they have no choice but to come out with a reveal.

Sun, 01/19/2014 - 21:47 | 4347174 Urban Redneck
Urban Redneck's picture

I just don't see the Chinese being backed into a corner with such a large and opaque share of production and such a large population to mask true non-official demand.

They've demonstrated they know how to BLS numbers, so they could overstate bar and panda production, understate domestic production, or go pure propaganda and drop stories about reviewing profitability of domestic producers or considering central bank sales to Vietnam.

Unless there's another piece of the puzzle, then the goal of any revised disclosure would/should be to further price suppression and facilitate further acquisitions at lower prices - which might be accomplished by failing to meet expectations (e.g. if they do announce, they only announce 1500 against a whisper number of 2700).

Sun, 01/19/2014 - 20:43 | 4347020 JamesBond
JamesBond's picture

somewhere there is ZHedger ready and willing to give them one bitcoin for it all...

 

 

jb

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