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China Demands Gold As Collateral For Zimbabwe Loans
China, as we noted here, is happy to provide the financing to turn Africa into Disneyland - Monorails and all - but there is one catch... the loans must be backed by gold as collateral. As The Source reports, China wants Zimbabwe to use its mineral proceeds to guarantee any future loans having already extended nearly $1.5 billion in the last three years to Harare’s ailing economy. Various minerals have been discussed to back the loans "but we feel gold is more stablee," Zimbabwe's Mines Minister noted. Of course, China is defending the demand, claiming "it’s in accordance with rules and regulations when granting any loan" and adding that "it doesn’t mean that we will use the collateral."
As The Source reports, Gold may be used as guarantees for existing, future loans...
China wants Zimbabwe to use its mineral proceeds to guarantee any future loans, a Chinese official said on Tuesday, adding that Beijing had already extended nearly $1,5 billion in the last three years to Harare’s ailing economy. In February, Finance Minister Patrick Chinamasa said the two countries were negotiating what he termed a comprehensive financial rescue package.
...
“We are discussing whether we can take proceeds of sales for some minerals as collateral for the loans,” said Han.
“The bank and the team from the ministry of finance are now working at a technical level on how they can set up such a mechanism, how much the collateral would be and how much loans they (Zimbabwe government) can get.”
In principle, the funding request and use of minerals as collateral has already been accepted, Han added.
He said Chinese loans to Zimbabwe were nearly $1,5 billion over the last three years – about 37 percent of the 2014 national budget at $4,1 billion – and that it was now burdensome for the government to repay.
China explains this is business as usual...
“We are asking for collateral because it’s in accordance with rules and regulations when granting any loan, but it doesn’t mean that we will use the collateral. This is the concept that we are now discussing with the Zimbabwe government,” said Han.
So not hollowing out another nation's reserves at all. But Zimbabwe adds...
“We have looked at gold and diamonds, which we are considering as part of the securitization,” Deputy Mines Minister Fred Moyo says in phone interview from capital, Harare.
Government may also consider using chrome, “but we feel gold is more stable,” Moyo says
But one has to wonder how likely it is that Zimbabwe will promptly repay billions of dollars of loans - given their track record - and what a great way for China to transform its excess USDs to Gold (and get paid interest while it waits).
Especially in light of the ongoing push for a multiple currency system in the nation (i.e. Zimbabwe is about to start printing again)...
Zimbabwe Multiple Currency System Essential to Economy: Mangudya
Multiple currency system is “sine qua non for turning around the fortunes of the economy,” Reserve Bank of Zimbabwe Governor John Mangudya says in 1st statement since assuming office May 1.
Economy faces “significant” challenges, incl. lower domestic demand, deterioration in BoP, banking “vulnerabilities”
Lack of liquidity and its limited circulation within economy remains biggest immediate challenge; central bank must find solutions to lack of formal interbank market and lack of lender of last resort
Central Bank to arrange for funding to capitalize itself, become lender of last resort
Seems like China is on to something!
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Racists.
Send in seal team 6 and have the IRS audit their asses.
But it is not money.
WHAT??
Thats crazy, I thought they were there to help the Africans ...
EDIT: i read it carefully and they quantify "this doesnt mean they will use the collateral" ... why are they asking for it then ??? ohhhh just in case ... i get it
These chinese are smt arent they ? funny thing while drilling in the disputed waters near Vietnam, they say they will do it until August 30 ... just be patient and we will leave
quite a performance, i guess billions of people, got a few geniueses here and there to pick from ...
It begins... The alarm horns are sounding in the Fed...
it is all according to schedule, everyone is on the plan .... it will not happen until the fat lady sings ...
Wow. A business contract between Zimbabwe and China. What could go wrong?
If you had to bet...who was the more savy party of said contract?
Zimbabwe.
Something along the lines of "If I owe you $10..."
After reading Brandon Smith's article down thread, this move by China makes perfect sense.
Serfs are many and broke, Tryants are few and well funded and heavily armed.
DaddyO
fools
the dollar is backed by the full faith and credit of the government
but gold is not backed by anything
https://www.youtube.com/watch?v=k8Htfcjk_JA&t=20s
It begins... The alarm horns are sounding in the Fed...
Annual budget @ frn4.1B? At nearly 120M an hour, the fed's been adding that much to the US money supply every 35 hours or so for the last 4+ years. C'mon, the beranke/yellen flow musters up a measly frn1.5B in less than 10 hours of QE. And it ain’t backed by nuthin.
Zimbabwe's still gotta lot to learn.
will not 'use' means the Chinese will not rehypothecate the collateral. Once they have that cold hard metal in their custody it's going to damn well stay that way.
There are plenty of geniuses but really, no genius really truly believes he can own the world.
Well, no...but if you own all the wealth, minerals, and oil what else do you need to posess to consider that all others are under your thumb?
Doesn't The Middle Kingdom know gold is barbaric?
Calling Dr. Krugman, Dr. Bernanke, Dr. Geithner, Dr. Friedman.....
I would much rather have one trillion Zimbabwean dollars.
Fucking genius!
Naw, just dustin' off an old, well known script.
Gold for paper......what a deal, gotta jump at that
Shhhhh, don't tell anyone.
if they wait maybe walmat will mark it down and the gold will be even cheeper
The first rule of Fight Club...
Gold Bitchez!
Africa is to China as North America was to Europe, starting around 1492.
I see a lot of Casinos in Africa's future.
I pity those black people living there. China doesn't give two shits about life and will drive them off the land. EPIC population dislocations and massacres.
Africans thought the West was bad ... just wait until they get a taste of the East.
oh you think this is new.
Zim was created only through the guns and finance and sanctions etc that were supported in various ways by the Anglo-American, Chinese and Russians.
why is your handle a Rhino?
China wants the resources in the land, not to live there.
You're sadly mistaken if you think Chinese mainlanders want to live in any part of Africa forever.
New china best seller
Confessions of a Chinese economic hit man.
Title changed parallely to correspond with phenomenum prosperously:
Confessions of Chinese 'american' Extorter of the Weak, Farmer of the Poor, Working for the Chinese 'american' King Class, the Middle Class
The mattering thing that an " American" would not notice is that Americanism is blobbing up.
-------------------------------------------------------------------------------------
Everywhere and always it an " American " way, the only place to be worth somthing.
Made me laugh.
The nature of 'american' Chinese Citizenism is eternal, and propensitized to blobbing up.
indeed...chrome plated gold would be rather tacky...
Barborous relic.
China will be a tough lender.
Can't pay. OK. Gimme my fucking Gold.
And if they dont, what then? Would China invade Zim? I just cant see that happening.
As per another post on this thread.....the term is economic hitman.
Ex-Rhodesian farmers might have some good advice for China on the value of Zimbabwean promises. If Mugabe hadn't murdered them on his way to the top. China better hold the collateral in escrow in Beijing.
China and Russia are preferred Zim partners (Commo's vs Anglo's); western interests be very cautious - the west was by and large only useful to install Mugabe who has lingered on long enough to see the coming fruition of the BRICS.
http://www.zimbabwesituation.com/news/zimsit_china-demands-minerals-as-s...
The deal further entrenches the Chinese presence in Zimbabwe’s natural resource sector, and one which they have jointly looted and plundered with ZANU PF for close to two decades now.
You obviously don't understand collateral.
Collateral is delivered PRIOR to the loan.
The loan is then repaid or not, and if not, the collateral is already in possession of the lender.
You Betcha Bwana!
No gold...bad juju for you 'bro!
"Finance Minister Patrick Chinamasa"
"Chinamasa??" Is it April Fool's Day or what?
.
ROR!
Every day is April 1st in the Mugabe Kingdom.
Is new Chinese export for world of news! MAY-pril Fool's Day!
You'd think they'd want something of timeless value as collateral, USTs or USDs. Why a depreciating commodity like gold? Everybody who's anybody knows it's best days are over...
http://www.reuters.com/article/2014/05/07/gold-outlook-idUSL6N0NS4LG2014...
Those crazy Chinese, who would ever think of using GOLD as collateral?
BTW, in case you're questioning 'Metals Focus' credibility (the linked article), I've done some quick research, and it seems EVERYONE there has an illustrious past with GFMS and Thompson Reuters, so you know they're the best of the best in unbiased precious metals analysis.
.
Ah, they must be the ones that lured Jon Nadler away from Kitco.
Well, all of those "journalists" will be replaced by computers who write content...all those guys will be labor stats soon enough.
If Zimbabwe has gold, what does it need a loan for?
....haven't you heard? Paper with Mao's face printed on it is moar valuable
It's currently in 'deep storage' much like a large amount of US gold.
Bingo! Unstoring is a costly, energy- and labor-intensive business...
No, no, you've got it all wrong. It's not a loan at all. Zimbabwe gold miners are just forward selling their production. It makes perfect sense. I mean, gold fluctuates. One day up, another day down, it's entirely too risky.
On the other hand, a dollar is always a dollar. Always. That's rock solid stability, something which Zimbabwe can use.
It seems to me that if anyone is taking a risk here, it's China.
Maybe China just wants to see the Gold, touch the Gold, shine and polish the Gold, and protect and hold and store Zimbabwe's Gold (without added storage fees).
So it is really cheaper and safer to store the Gold in China (heh). Like where-ever the Ukraine Gold went for safe keeping.
The Zimbabwe leadership might visit one of China's new ghost towns (first dibs !!) and visit their Gold in China. One day that may be an escape/exit strategy. Maybe when Zimbabwe finally hits the skids then China has provided a "safe haven" for the ex-Zimbabwe leaders who have sold all the land to China.
But, maybe China will return the Gold when Zimbabwe needs it back. /
It could be completely innocent Gold fever/lust of the worthless relic.
Maybe Zimbabwe at this stage is being finally assimilated by China, resistance is futile.
Similar to Ukraine and Russia.
China wants Africa as their backyard, and the new new cheap labor.
So in other words, China does not recognize the USD as a reserve currency.
SSSSHHHHHHHHHHH!!! You're going to spoil the surprise for everyone.
Wait, loans were supposed to be paid back?
Maybe they could sell their gold for some Zimbabwe dollars on eBay. They would get a lot more fiat for their money.
Fuck it.
Give me another beer and a bong hit.
They like dumbed down folks.
Africa is truly the stupid continent.
and the usa isn't ????
Actually its a win-win-win for China, for Africa, and for gold.
Try to imagine what a country would look like if it was run by the infantiles that run Zimbabwe. Oh wait, we live in a country run by Zimbabwe like infants.
Now yer talk'n sense, ya city slickers........
This is brilliant. Once again, the old school takes the new school to the woodshed.
I would have thought the art work on the Zim-bucks woulds have been good enough for collateral.
Are Chinese loaning the African USD or Chinese money ? Both USD and Chinese RMB are massed produced like toilet paper, what's the value of it ?
On the other hand, if Zimbawae has gold, why would they need a loan ?
So, who is scamming who ?
A tour guide told me that the Nicaraguan canal was tied to their gold reserves if they (the Nicaraguans) didn't hold up their end of the deal, and that this was promised by Ortega himself without a vote in their National Assembly.
I haven't been able to find anything online to back this up, so if anyone reading this can find a link please provide it below.
TRADITION, BITCH!
Don't the people of Zimbabwe know about Cash-4-Gold? They even provide a free envelope and free shipping. And they promise to pay more than anyone else. Perhaps they can use this as some sort of barganing chip.
...Finance Minister Patrick Chinamasa....
Seriously? As in, "Don't whip me Masa!" {via Roots for the younguns}
I think statement puts paid to their anlysis. Clearly the US is on the edge of recession with negative GDP 'growth' in the first quarter. There is no recovery.
And if there is no recovery the options are to let the ship sink, or puff away with the printing press. Now Im told TPTB will not allow defaltionary spiral...so the option is an inflationary blow off.
I also fail to see how anybody can do an anlysis when the market has for past few years been under total price control by TPTB - not a market at all. And when they tried to trash the price too much China / Asia bought it up as fast as they could...TPBT almost blew their own brains out with that heavy handed knock down of gold.
WHEN it was a market of true price discovery gold went to near $2,000 and that was some few trillion USD ago.
Now we have the US trying to start wars with a major nuclear power who is allied to another major nuclear power and controls a large portion of energy to Euroope...risk much?
If anything the geopolitical games are going to heat up as the competition for energy and food resources heats up....
It is possible that gold can go to $500 but only if TPTB want to throw the printing press at the coomex and dont give the slightest shit how obvious their corruption....oh and that china would buy another 5000 tons if they did that.
Got news for you: the rigged price has been rigged since 1933 and was rigged during the last peak too.
Don't the Chinese realize that you can just print Gold?
We wont know the free market price of gold until the back of the manipulators is broken...and that may be when they lose control of USD and or rates....or some other event swamps them and there is massive massive demand for holding physical gold.
If a new cartel wants to make money.....buy up lots and lots of gold...then demand delivery. See them scramble to find it...
Will African slaves become an acceptable settlement currency?
China has 500M destitute peasants in the countryside who already speak Chinese. Why would they want any African slaves?
Sterilized females?
You have a point. 50M more men than women because of the 1 child policy and abortions. The natives will get restless.
Already played out. American slaves will be the next to have their turn.
A. Define China. Is the China quoted here the people, the government or the frigging CHINESE AND INTERNATIONAL BANKERS? I can guarantee you that the Chinese people have no interest in turning the Zimbabwe people into their debt slaves... what evil faction of China does seek this?
B. How can it be right and fair to trade fiat nothingness created from less than thin air for a phsyical asset that has real value. Of course banks do this as their main choice of enslavement when they have given themselves monopoly power to create an ddistribut power.
Zimbabwe and all countries should take the high road and politely tell the bankers to go ply their parasitic trade on someone stupid... and then plan how to survive and thrive without becoming debt slaves.
Think for a moment - how does a southern African dictator get into power and stay in power for 40 odd years?
Zimbabwe would not exist if it were not for the banker games and vested interests of supposedly opposing east AND west key nations.... the very ones now turning the USA into a prospective Zimbabwe.
So China is buying Zimbabwe's in the ground gold reserves with printed paper. Given what Zimbabwe just went through with their own worthless paper, you would think they might have learned something. The irony is about as thick as their skulls.
Isnt the mining business the heart beat of the Zimbabwe economy? they have to sell something in order to get currency with at least some confidence at this stage in order to survive.
What other option do they have? sell it in US dollars?
Printing money is not the ideal solution for these guys, given the history......what to do?
In my opinion this is a genius stroke by China, no doubt the loans are too much to pay back anyway so eventually the gold will be transferred.
What a great idea. "Cash for Gold."
Who woulda thought?
rofl.....what fool would think that these African nations would actually honor this agreement? They are as corrupt as their Chinese overlords and just as greedy.
monorail?
hahahaha.
China sayz: gold bitchez!
Joking aside, Zim not that long ago was printing $1 trillion bills. If I was making a loan to them I'd want hard assets as collateral too.