"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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tony wilson's picture
"China Expected To Announce It Has More Than Doubled Its Gold Reserves"

 

with german gold shipped from the federal reserve

Keyser's picture

Along with the Queen's gold from the BOE.

gwar5's picture

I commented last week that it was about time for Chicoms to make their announcement. They announce every 5 years in January. I think they have much more than 2700 tons. They're not going to show all their cards because it's counterproductive, just like there's no reason to declare all your nuclear warheads. Why would you? 

Rickards says they will only need 4000 tons to be a big player at the reset table. They could already have as much as 6000 tons. Currently, the squids have been going to the miners and pressurring them into selling their forward gold on the cheap below current spot --- but the Chicoms have been beating them at their own game by going around and countering the miners with a premium for their forward gold!  Chinese not missing a beat.  #Winning!

 

Obamananke's picture

I do not trust any governments official numbers. That pretty much goes for anything unemployment , inflation, gold holdings ,etc it is all Bullshit to me.

nakki's picture

So that's where all of ze German gold is being stored now. 

the not so mighty maximiza's picture

with so much gold they can write off U.S. debts as a loss, and fuck us like the whores we are

10mm's picture

And we deserve to be treated like whores.

the not so mighty maximiza's picture

10mm , i doubt you are going to do that willingly

TheReplacement's picture

I should think it rather smart to treat whores well.  They do nothing but bring pleasure for buck. 

Now for those who take our bucks for their own pleasure...

What I'm saying is how dare you degrade the honorable profession of whoring by comparing it to what the west has been doing. 

Keyser's picture

THey are not that stupid. They will use all the US paper they have accumulated to purchase physical assets, like real estate and companies in the US. They are going to own the US long before the reset. 

teslaberry's picture

http://longbets.org/636/

after reading Zerohedge since 2009, i paid to post this on longbets in early 2012. here i am 2 years later---watching my prediction come true in ZH rumors. 

 

i wish seeing the future had helped me make money though, it didn't. 

 

Save_America1st's picture

Damn it!!!  I had never heard of that site before.  Thanks a lot, fucker!  Now I'm going to have to start gambling again after I had kicked it for the last 6 years and stopped playing fantasy football!!!

It's all your fault! LOL

;-)

(got any good predictions??? lol)

TheReplacement's picture

Double or nothing that they (announced or not) end up with more gold than the US by the end of his Presidency?

Duc888's picture

 

 

How's Germany doing?  (or Fort Knox, for that matter).

22winmag's picture

If true, this is the best justification yet for hangining U.S. politicians by the neck until dead.

the not so mighty maximiza's picture

50% of the poplulation gets goverment checks one way or anouther, you will need allot of rope

css1971's picture

They are the ones going to be doing the hanging of politicians.

dcj98gst's picture

Yes, all Obama has to do is look at what is happening in Ukraine (Kiev) to see Washington, DC's future in a few years.

greatbeard's picture

China sure buys a lot of gold.  I wonder what would happen to the price if they stop?

therevolutionwas's picture

What is "the price"?  That is the question. 

Watch Bird 1's picture

Good questions, both. Does anyone know how PBOC pays for its imports?  (Using US bonds to pay for gold imports would be an interesting approach.) just wondering.

robertocarlos's picture

If you are in second place behind the USA in gold reserves then that means you are in first place.

Max Cynical's picture

I'm curious how Americans would react if they found out the U.S. has no gold?

10mm's picture

This is going to be intresting come spring. To cold for dollar fold.

Confundido's picture

The Chinese are not stupid. Why would they show their cards? They are not going to show them, because they have nothing to win by doing so. This is pure gold bug propaganda. I am a gold bug, but am not delusional.

Keyser's picture

If there is one thing I have learned in Asia is to never underestimate the Chinese. They are skrewd and ruthless when it comes to making $$$ or separating you from your $$$ by any means. If they are leaking information, it is for a reason. 

 

FreedomGuy's picture

This will be a surprise only if you do not read ZH.

Despite being a "barbarous relic" I would guess that China has a long term currency play in mind. At this stage of world affairs it would not take all that much.

If it is true they could really do a power play by inviting anyone to see and count it and then challenging anyone to do the same for the U.S. Treasury and Fed. It would be truly revolutionary.

css1971's picture

I recommend you take a regular look at the RMB vs USD over a long multi year timeline.

They are allowing it to appreciate, but it is still heavily suppressed.

Casserole of nonsense's picture

Cnbc will trot out some Wall Street banksters to tell us it is less than they expected and gold will get crushed. 

ncdirtdigger's picture

Is 2014 the Chinese Year of the Golden Shower?

SweetDoug's picture

'

'

'

What's going to happen when some country rats, say Germany, that the US does not have any gold in Knox/The Fed and China suddenly sells all the US treasuries, then announces it's backing the yuan with gold?

Where will the price of gold be?

 

•J•
V-V

logicalman's picture

The price of NOT having any will be the more important question.

mijev's picture

You'll never see anything in a chinese newspaper or tv show that the government wonks don't want you to see. Then again that's probably also just as true in the US now. 

Hapa's picture

I have to say I'm greatly entertained by the news these days.  What a ride!  So much drama.  I hope everyone takes some enjoyment from this. We are in an epic period of humanity struggling to take back the sovereign rights of the individual and breaking the ancient chains of slavery under the rule of a despotic oligarchy. We all know that intimately. The whole world is in on this.  If there's a breakthrough, it'll effect everbody and the change will be vast.  Happens every couple of millenium, they say.

thtmnbhndthecrtn's picture

i have my little partial-tonne, and that is what matters....

Spungo's picture

In totally unrelated news, America has doubled its tungsten reserves.

css1971's picture

Actually this is as interesting for what it does to the 10 & 30 year UST prices as the gold price.

When the bond bubble does pop (I suspect it already has), the USA is history as the world super power, it takes about 1-2 generations to realise it, but you'll see the military getting downsized by 50% or more over that time. The story you will hear, for years, is of continual budget cuts. End of the American Empire and the rise of the Chinese.

Those expecting a rapid reset are I think being a bit premature and underestimating the size and momentum involved. Think decades, not years.

Next question is where are the resources to be fought over; Middle East is already in progress, plus Australia, Khasakstan, Africa...

dcj98gst's picture

It will have fits of abrubt downdrags though followed by years of calm. 

Sufiy's picture


China Expands Gold Reserves to 2,710 Tons - Third Largest In The World

 Now we have the confirmation from China IMF reporting to the previous report from Bloomberg. China is very serious in accumulation Gold and latest reports from Germany about the Gold price manipulation are coming now with the record leverage at COMEX with 112 owners per each ounce of Gold!

http://sufiy.blogspot.co.uk/2014/01/china-expands-gold-reserves-to-2710....

 


There Is No German Gold Left At The New York FED

With the highest on record leverage at COMEX of 112 owners for every single ounce of Gold and record low COMEX registered Gold at 11 t we have the set up for the major blow out phase in the Gold market. Who in their mind will continue to hold Gold at LBMA any more? According to Eric Sprott, we can expect a failure to deliver Gold and lawsuits with deliveries last February from COMEX of 40 t and China buying at least 100 t of Gold every month on average now.
  Once Gold will breach $1270 level Andrew Maguire's discussion about the massive short squeeze will become the reality and even if his predictions about $200 Up-days will not materialise, the move by Gold to the upside from the most oversold condition in history will be nothing less than spectacular.

 

http://sufiy.blogspot.co.uk/2014/01/there-is-no-german-gold-left-at-new....

mt paul's picture

Comex is a paper market

little or no gold there...

Shanghai is a bullion market

strictly deliverable hard gold there

99.999 kilo bars ..

 

soon there will be a Shanghai price 

comex price will be irrelevant 

dcj98gst's picture

If China were to announce that they plan to sell 40 billion of US treasuries a month (nullifing the FED efforts) and with that buy gold, they could take down the US markets and our global domination without firing one shot.

kenezen's picture

True, but, while we are not a competetive exporter, producer, we do produce and send them needed Agricultural, energy product and scrap. On the consumer side we remain a substantial customer as long as our Dollar holds up.  But you are correct as could Japan as well. 

TheReplacement's picture

Do you think they want to tank our system or just buy it up underneath us?  Tanking would be great for spectator value but buying up is a long term investment strategy.

This isn't football.  This is war.

kenezen's picture

China's press months ago announced it was time for the world to be less dependent on The Dollar and the USA. That's why many investment houses and wealthy are off shore setting up subsidiaries in Re-Insurance firms to have safe aternative residences. It's not just the Chinese. It's our own banks, hedge funds and investors. The Chinese are coming close to having adequate gold to relace the Dollar as a Reserve Currency.  The BRICS have already set their currency as the trade between them. The Dollar could go down to 68 on the current futures market; And at least -20% in consumer purchases.