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China’s Stealth Gold Reserves To Quadruple as IMF Seek Answers

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China’s Stealth Gold Reserves To Quadruple as IMF Seek Answers

- Enter the Dragon - China Stealthily Accumulated Massive Gold Hoard
- IMF Seek Answers On China’s Mysterious Gold Reserves according to Bloomberg
- Major demand issue and bullish support for gold rarely covered in mainstream
- China may disclose its gold reserves by October in a bid to have the Yuan included in SDR currency-basket
- China has not made its gold holdings public since 2009
- Bloomberg estimates that reserves may be as high as 3510 tonnes, 2nd largest in the world

Image of Gold Hoard and Dragon’s Eye from ‘Desolation of Smaug’
Image of Gold Hoard and Dragon’s Eye from ‘Desolation of Smaug’

Enter the Dragon. China’s push to challenge U.S. dominance as the global economic superpower and to challenge the dollar as a global reserve currency involves gold - “a lot of gold.”

China may soon make public that it has quietly accumulated a massive hoard of gold in recent years. This was done in order to bolster their bid to have the yuan included in the basket of currencies that make up the IMF's Special Drawing Rights (SDRs) according to an article by Bloomberg.

This is something Jim Rickards, ourselves and many analysts in the gold sector have said would happen for some time. The People’s Bank of China’s (PBOC) quiet ongoing accumulation of gold is something we frequently cover as we believe it is an important demand factor in the market that is largely ignored by most analysts and in most coverage of the gold market.

Officially Reported Gold Holdings (Not Including People’s Bank of China) – Wikipedia
Officially Reported Gold Holdings (Not Including People’s Bank of China) – Wikipedia

Currently the SDR is composed of dollars, euros, yen and sterling. It is further testimony to the new emerging order that the yuan is under consideration even as it establishes the AIIB which looks set to rival the IMF and World Bank.

China has not publicised its gold holdings since April 2009 when their holdings doubled to 1,054 metric tonnes. The announcement surprised most market participants at the time and was likely a factor in the higher gold price seen in 2009.

Bloomberg speculates that the PBOC may have increased its gold reserves three-fold since that time to over 3,000 metric tonnes.

"The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons”, says Bloomberg Intelligence, based on trade data, domestic output and China Gold Association figures.

China would therefore have the third largest gold reserves in the world - second only to the U.S. and Germany.

It is worth noting that the U.S. refuses to allow their gold reserves to be publicly audited and the Bundesbank is having difficulty repatriating much of its gold stored with the Federal Reserve. This has led many analysts to speculate that the U.S.’s gold reserves have been leased out or sold or are encumbered as part of an ongoing effort to manipulate gold prices.

Analysts who closely follow the gold market, believe that Chinese reserve holdings may be much higher. Shanghai and the SGE has superseded Hong Kong to become a major hub for trading in physical gold not just in Asia but globally.

It seems likely that the Chinese government have been accumulating gold by stealth using proxies in Shanghai.

China's ambition to make the yuan a dominant, if not the dominant reserve currency is now beyond dispute. However, they have a long way to go yet. The IMF estimates that the dollar and the euro together currently make up 85% of global reserves.

If their IMF ambitions do force them to disclose their gold holdings it does not follow that they will make public their entire reserves unless they deem it politically expedient to do so.

So Bloomberg Intelligence estimates of China's reserves may be accurate but they may be significantly understated.

This is unlikely, however. The secrecy with which China operates with regards to gold demonstrates the strategic importance that they, like Russia, place on gold.

Bloomberg reports,"In a rare comment on gold, Yi Gang, the central bank’s deputy governor, said in March 2013 that the country could only invest as much as 2 percent of its foreign-exchange holdings in gold because the market was too small."

Elsewhere, Bloomberg reports that China's foreign reserves "have surged more than fivefold in a decade and are the biggest in the world.”

Central banks globally are expected to add another 400 tonnes to their reserves this year indicating a degree of distrust in the current monetary order by the very entities that issue fiat currencies.

 

The Dragon's Gold Hoard

It is almost certain that the People's Bank of China (PBOC) is accumulating more gold than they are declaring publicly and indeed officially to the IMF.

It is interesting as the PBOC is the only major central bank that has not been transparent with regard to gold reserves, even Russia has declared their gold purchases.

(As a side, one should note that there is little reason why Russia may not adopt the Chinese practice of not being transparent in this regard in the coming years given the deterioration in relations with the West.)

The Chinese government have been surreptitiously accumulating vast quantities of the precious metal in recent years and there is no reason to believe this buying will end in the coming months as geopolitical and monetary risks remain.

And yet this buying and the presence of the PBOC in the gold market is notably absent from most analysis about gold.

Figures from the Shanghai Gold Exchange (SGE) – which has overtaken Hong Kong as China’s main gold hub and which only deals in physical gold – suggest that some of the very high withdrawals may be going to the PBOC's gold hoard.

This year has seen very high volumes passing through the SGE again. Last quarter alone, SGE withdrawals were a new record high at 623 metric tonnes.

It is likely that the PBOC accumulated some of these sizeable withdrawals.

It is worth noting that the PBOC's gold reserves remain small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.

The PBOC is almost certainly continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices.

They also do not wish to create a run on the dollar – thereby devaluing their sizeable reserves.

Based on the huge gold withdrawals seen on the SGE in recent years, we would not be surprised to see an announcement from the PBOC, sometime later in 2015 or in 2016, that they have more than quadrupled their reserves to over 4,000 metric tonnes.

goldcore_chart3_22-04-15

However, speculation regarding the amount of an increase is far less important than the salient fact that there is a large ongoing buyer of gold in the market that is unacknowledged and most participants are aware of.

Total official central bank demand continues at roughly 100 tonnes every single quarter.

However, this does not include the ongoing clandestine and undeclared purchases by the PBOC. Conservative estimates put PBOC demand at 100 tonnes a quarter or at over 400 tonnes for the year. More radical projections are of demand of over 1,000 tonnes from the PBOC in recent years.

Only time will tell but awareness of this demand and the announcement itself are an important reason that we remain unashamedly bullish on gold.

Breaking Gold News and Research Here

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,202.40, EUR 1,113.44 and GBP 799.19 per ounce.
Yesterday’s AM LBMA Gold Price was USD  1,197.70, EUR 1,120.26 and GBP 804.58 per ounce.

Gold climbed 0.49 percent or $5.90 and closed at $1,201.80 an ounce yesterday, while silver rose 0.13 percent or $0.02 closing at $16.01 an ounce.

goldcore_chart4_22-04-15

Spot gold in Singapore was relatively unchanged at $1,203.11 an ounce. Gold broke through the $1,200 an ounce barrier in London trading today on dollar weakness and continues to consolidate at the 1,200 level.

It is hoped that Greece will agree to the bailout structure by the end of the month. Meetings are set in Riga on Friday and the possibility of a Grexit is still on the cards which should support gold.

Mixed signals are abound as ECB vice president, Vitor Constancio, suggested that Greece might not be forced to leave the eurozone just because it defaults on its debt.

On Monday in a Wall Street Journal article Constancio said that he is convinced that Greece will remain in the eurozone, attempting to dampen concerns of a Grexit. “I am convinced” that there won't be a Greek exit, from the eurozone, Vitor Constancio said in remarks to European parliamentarians in Brussels. “The treaty doesn't foresee that a country can be formally legally expelled from the euro,” he said.

It brings to mind the old adage to “never believe anything until it is officially denied”.

In Japan equity markets are surging to a 15 year high on corporate earnings which have been reasonably good and cheap money.

Gold purchases in India began slow but increased momentum during the Akshaya Tritiya festival, usually one of the busiest gold buying days, industry officials said. Indians are the world's number two buyer of gold, after China, and Akshaya Tritiya celebrated yesterday is one of the most auspicious times to buy gold along with Diwali and Dhanteras. Gold imports doubled in March to 125 tonnes from only 60 tonnes a year before.

Even though sales increased during the festival, Indian demand risks falling slightly for a second straight year in 2015. The reason for a potential drop is that unseasonable rain and low commodity prices have hurt rural buyers. It is these buyers that account for almost 60 percent of the country's total demand.

Spot gold near noon in European trading is up 0.06 percent or $1,202.44 an ounce. Silver is up 0.15 percent at $16.05 an ounce while platinum is trading down 0.49 percent at  $1,143.30 an ounce.

Download:  7 KEY GOLD STORAGE MUST HAVES

 

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Wed, 04/22/2015 - 13:57 | 6018874 RaceToTheBottom
RaceToTheBottom's picture

With China wanting to be part of the upcoming successor to the Fiat dollar, the Fiat SDR, what is to prevent China from leasing out all its gold as a condition to being part of the SDR game?

Their entry will not be free.

Wed, 04/22/2015 - 13:43 | 6018786 wrs1
wrs1's picture

Wishful thinking since gold is now back to it's most recent lows.  1200 is an impenetrable barrier for gold.

Wed, 04/22/2015 - 13:57 | 6018877 Hongcha
Hongcha's picture

$1200 will be breached like the Maginot Line.  Huge stop run and an impressive covering rally, in that order.  That's the playbook imvho.  I have half of what I want now and will get the other half then.  If I'm wrong I'm content.

Wed, 04/22/2015 - 13:47 | 6018824 Not_FieldingMellish
Not_FieldingMellish's picture

Cognitive dissonance and confirmation bias are hallmarks of these shills.

Wed, 04/22/2015 - 13:40 | 6018773 Bastiat
Bastiat's picture

Right now, all USD, Yen, Euros, Rubles, Yuan etc. can buy gold at less than $1,200USD/oz.   This is only possible because: 1) stockpiles are being depleted and 2) the suppression of the price vs the bubble assets discourages retail investment.  #1 is not sustainable; #2 can change in a flash.  There is an astounding amount of money out there, when it starts chasing gold (and/or silver) and sucks the stockpiles dry, it will be something to behold.

Wed, 04/22/2015 - 13:46 | 6018810 Not_FieldingMellish
Not_FieldingMellish's picture

...or... the top was in in 2011 long with all other commodities and gold is heading into another 20 year stagnation period.

Wed, 04/22/2015 - 13:44 | 6018797 wrs1
wrs1's picture

Why would it chase gold or silver?  It hasn't for years and right now, it's running away from them.  

Wed, 04/22/2015 - 14:18 | 6018973 zvzzt
zvzzt's picture

depends on your base currency. gold in euros still going up since 1990's. 

Wed, 04/22/2015 - 13:34 | 6018739 Hongcha
Hongcha's picture

Gold and silver are bound for new lows (in USD) for the 2011-2015 move.  It will happen because it can.

Petrodollar wants one more ride around the block before she abdicates.

The new lows will take the price per ounce (in USD) well below aggregate all-in mining and refinement costs, driving many miners out of the business and many stackers out of their positions.

If you want really cheap bullion gold and silver, stay thy hand for that event and it is coming right soon.

 

Wed, 04/22/2015 - 13:48 | 6018832 Not_FieldingMellish
Not_FieldingMellish's picture

... or a long way away.

Wed, 04/22/2015 - 13:21 | 6018679 zrussell
zrussell's picture

That holdings chart, along with all "holdings" reports released to the public, is total BS.

Wed, 04/22/2015 - 13:16 | 6018651 litemine
litemine's picture

It is interesting as the PBOC is the only major central bank that has not been transparent with regard to gold reserves, even Russia has declared their gold purchases

 

Then audit the Fed......I don't believe what the claims are.  Even the holding of other countries, my bet are short.

Wed, 04/22/2015 - 12:57 | 6018531 litemine
litemine's picture

Whomever holds the Gold Makes the Rules.....

Unless it interfears with American Bankster Plans which is the Controlers of the NEW WORLD ORDER which is for the Elite and making others SLAVES to them......Fuck The IMF and the TPP which is for Corporate American Companies who want to force GMO foods on other Country's Peoples.

Electronic Banking....Cash Free Societys where they can CLICK your Savings  GONE.

 Fuck Them and their Minnons.

Wed, 04/22/2015 - 12:22 | 6018415 Joebloinvestor
Joebloinvestor's picture

It would be a nice thumb in the eye if China announces holdings over 8,000 tons and an open audit, unlike the US.

What a way to announce the arrival of the new reserve currency.

Wed, 04/22/2015 - 11:52 | 6018285 Not_FieldingMellish
Not_FieldingMellish's picture

Pure conjecture. For all we know they could be lying about production figures and have been selling. No one knows anything about anyones stack. If they are accumulating then its in their best interest to keep the price as low as possible for as long as possible. 

Wed, 04/22/2015 - 11:39 | 6018255 Consuelo
Consuelo's picture

China is fine to play Sun Tzu while it can.   The aggressive foreign policy ambitions of the U.S. (the TPP being a part of that policy), somewhat change that dynamic however.    Having in their possession, '4000 tons' (A-ha-ha-ha-ha....) or more, makes it possible for China to have the leverage they need to employ Goldfinger at a time of their choosing.   It's a good place to be.

Wed, 04/22/2015 - 11:35 | 6018238 KnuckleDragger-X
KnuckleDragger-X's picture

It's not so much how much they have but how are they planning on using it.

Wed, 04/22/2015 - 11:31 | 6018224 Caleb Abell
Caleb Abell's picture

"China would therefore have the third largest gold reserves in the world - second only to the U.S. and Germany."

 

Then China must have the second largest gold reserves, since all Germany has in its gold vault is is an IOU from the US.  The germans shouldn't hold their breath waiting for the US to hand it over.

Wed, 04/22/2015 - 13:41 | 6018778 Bastiat
Bastiat's picture

You got that right.

Wed, 04/22/2015 - 13:01 | 6018566 litemine
litemine's picture

The Holdings in the NEW YORK FED>.  Only 2% is OWNED by the American Government.  The others allow the Banksters to loan or lease out gold  for the bankers profits.  When the truth is out.............the American Dollar is FUCKED.

Wed, 04/22/2015 - 11:30 | 6018216 JamesH
JamesH's picture

I bet China's gold reserves are more than the US

Wed, 04/22/2015 - 11:19 | 6018166 scrappy
Wed, 04/22/2015 - 11:21 | 6018175 GuusjA
GuusjA's picture

Netwerk @MinPres: "Juridische problemen lossen we politiek op", "Waar een wil is, is een weg" & "Boter bij de vis".

 

http://www.volkskrant.nl/dossier-4-uur-nieuwsbreak/knoledge-cesare-bootv...

 

RuitenBoer: "Als je in Nederland geboren en getogen bent, krijg je het gevoel dat Nederlanders alles op eigen kracht hebben gedaan. Dat we al onze rijkdom in alle eerlijkheid hebben verkregen. Dat klopt niet helemaal, en dat zie je terug in het nieuws over het ParadigmaConflict tussen het KAPITAAL en de ARBEID."

 

http://www.volkskrant.nl/binnenland/kamp-fel-tegen-omgekeerde-bewijslast...

 

Het KAPITAAL wil niet dat de eigendoms-rechten van 'olie en gas' wordt overgedragen aan de VN. Dit om het systeem 'Leven en Laten Leven' op te tuigen. Investeringsmaatschappij Egeria weigert naar de openbare hoorzitting te komen die de Tweede Kamer volgende week organiseert over private equity.

Het private-equityfonds uit Amsterdam, dat 1,7 miljard euro onder beheer heeft en tot begin dit jaar eigenaar was van NRC Media, heeft bedankt voor de uitnodiging van de vaste Kamercommissie voor Financiën, omdat ze weten dat de @nrc de context van de 'wiskundige definitie van de absolute waarheid' onder de pet hebben gehouden. 

 

http://www.trouw.nl/tr/nl/4492/Nederland/article/detail/3973805/2015/04/...

 

De extra Europese top, waar ook onze @MinPres zijn opwachting maakt, is zogenaamd ingelast wegens de aanhoudende stroom bootvluchtelingen die vaak het vasteland niet haalt, maar ook om de volgende fase van de 3e SpinozaGolf te bespreken.

Wed, 04/22/2015 - 11:28 | 6018206 Captain Debtcrash
Captain Debtcrash's picture

Precious metals should not be owned in hopes it will be a replacement for the dollar as a medium of exchange.  Gold and silver should be owned because it will probably be the replacement for bonds as the preferred safe asset class.

Wed, 04/22/2015 - 11:16 | 6018149 Ham-bone
Ham-bone's picture

Exactly What Did Nixon Say 43 Years Ago...about dollar convertability to gold?  A little clean up of the consensus historical record and potential implications.

http://econimica.blogspot.com/2015/04/exactly-what-did-nixon-say-43-years-ago.html

Wed, 04/22/2015 - 12:15 | 6018383 Bemused Observer
Bemused Observer's picture

Well, perhaps the US govt. has problems with the conversion of dollars to gold, but I've never had any problems buying gold with their crappy fiat. And at artificially low prices too!

 

Thanks guys! :-)

Wed, 04/22/2015 - 13:52 | 6018854 prefan4200
prefan4200's picture

China may have a lot of physical, but if they are clever, China may have also purchased (gone long) many of the naked short positions sold on the paper PM markets.  China would be in the enviable position of one day being able to sell their physical to the naked shorters during a short squeeze for much more than China paid, and having those same naked shorters hand China's physical right back to China to cover their shorts.  The event precipitating this rise in the price of PM's could be under China's control as well - the sudden unexpected announcement of a Chinese PM (likely gold) position way higher than expectations coupled with an announcement by the Chinese that they also own many tons of long paper PM's that they plan to begin calling in for physical delivery.  This could simultaneously enrich China, crush the Comex, establish China (Shanghai) as the go-to source for PM prices, eliminate the credibility and possibly viability of the US paper PM markets, and place the dollar's position as the reserve currency in serious jeopardy.  It would be an extremely aggressive provocative series of moves, so it will probably never happen as I've described.  But if it should, all hell will break lose in the physical PM markets, with prices soaring higher than almost anyone could have imagined. 

 

Wed, 04/22/2015 - 14:06 | 6018919 angel_of_joy
angel_of_joy's picture

China will disclose nothing and will ignore the SDR, since US will never give up its IMF veto rights. The SDR is already irrelevant. It might have been the "plan B" for team West, but the rest of the world has already decided it's not interested in that game anymore...

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