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China Increases Gold Holdings By 57% "In One Month" In First Official Update Since 2009

Tyler Durden's picture




 

Back in April we wrote that "The Mystery Of China's Gold Holdings Is Coming To An End" as a result of China willingness to add the Yuan to the IMF's SDR currency basket which would require the disclosure of China's gold holding ahead of an IMF meeting on SDR composition which may be held in October.

By way of background, the reason why everyone has been so focused on Chinese official gold holdings is that there has been no official update to the gold inventory of the world's biggest nation, which have been fixed at 33.89 million oz since April 2009, a little over 1000 tons. In other words, the PBOC's gold inventory has been "unchanged" for over 6 years which is in stark contrast to the ravenous buying of physical gold China has been engaging in for the past 5 years.

As we further noted in April, "with China disclosing so little about its hoard, finding out how much the central bank has in its vaults is of increasing interest to traders. Confirmation of bigger holdings would signal the importance of the metal as a reserve asset and boost market sentiment, TD Securities’ Melek said. At a time when prices are languishing, the buying could give support, said Suki Cooper, director of commodities at Barclays Plc in New York."

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. The press office of the People’s Bank of China in Beijing didn’t respond to a fax seeking comment sent on April 14.

Well, the long awaited moment has finally arrived and this morning, after a 6 year delay when, China finally admitted that it had been misrepresenting its gold holdings for a very long time, when it announced that its gold holdings had increased from 38.89 million to 53.31 million troy ounces, a 57% increase "in one month."

 

The amounts to a new grand total of 1658 metric tons, an increase of 604 tons from the 1054 reported last in 2009 and which according to the PBOC was also the May 2015 total.

What is surprising about this release are three things:

First, while we welcome some long overdue "transparency", the number is well below official expectations. This is what Bloomberg said previously: "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. A stockpile that big would be second only to the 8,133.5 tons in the U.S."

Second, China has finally admitted that its official gold numbers were fabricated (alongside all other official data released from the communist country) as it is impossible the PBOC could have bought 600 tons of gold in the open market in June when the price of the yellow metal actually dropped by 2%.

Third, and perhaps most important, is the reasoning behind the increase. While in April it was expected that China will be focused on SDR acceptance of the Yuan, that was subsequently refuted when it became clear that the IMF has no intention of making such a decision any time soon.  So why make the disclosure?

  • PBOC SAYS GOLD RESERVE INCREASE AIMS TO ENSURE SECURITY

And from the PBOC:

Gold as a special asset, with multiple attributes financial and commodities, together with other assets to help regulate and optimize the overall risk-return characteristics of international reserves portfolio. From the perspective of long-term and strategic perspective, if necessary, dynamically adjusted international reserves portfolio allocation, safety, liquidity and increasing the value of international reserve assets.

In other words, China had to wait until its stock market was crashing to present the "systemic stability" bazooka: gold.

Because in revealing a surge in its gold holdings, the PBOC is hoping to finally provide that final missing link that will boost investor sentiment, and get people buying stocks all over again.

And now that the seal has been finally broken after so many years, and since today's update indicates that Chinese gold numbers are clearly goal-seeked with a specific policy purpose - to boost confidence - we await for the PBOC to start leaking incremental gold holding data every month (and especially in months when the market crashes) which will bring us ever closer to what China's true gold holdings are.

* * *

The SAFE's full accompanying Q&A statement with reporters on its latest reserves is below (google translated):

People's Bank of China, the State Administration of Foreign Exchange, the official answered reporters' questions on China's total foreign debts, foreign exchange reserves, gold reserves, etc.

 To further enhance the quality and transparency of foreign data, fully reflects the outcome of the internationalization of RMB recently, People's Bank of China, the State Administration of Foreign Exchange SDDS according to IMF data (SDDS) announced the country's foreign exchange reserves, gold reserves, and other data, corresponding adjustment of the caliber of external debt data, published a full-bore renminbi debt, including the debt included. People's Bank of China, the State Administration of Foreign Exchange person in charge of related issues answered reporters' questions.

First, what SDDS is?

A: SDDS namely IMF (IMF) Special Data Dissemination Standard of, is an international standard on countries' economic and financial statistics published by IMF enacted in 1996, the English name Special Data Dissemination Standard, referred to as the SDDS.

In order to improve the transparency of the Member States of macroeconomic statistics, IMF has developed GDDS (GDDS) and Special Data Dissemination Standard (SDDS) two sets of data dissemination standards. Both the overall framework basically the same, but in actuality, SDDS for data coverage, publication frequency, timeliness released, data quality, and other aspects of the public can get more demanding. SDDS the countries need to adopt in accordance with the requirements of the standard, published data of the real economy, fiscal, monetary, foreign and socio-demographic and other five sectors.

Currently, there are 73 economies adopted SDDS, including all developed economies, as well as Russia, India, Brazil, South Africa and other major emerging market countries. GDDS country had been announced by macroeconomic data.

Second, why should the adoption of SDDS?

A: With the deepening of economic globalization, improve data quality, make up the data gaps and enhance data comparability and enhance data transparency become a consensus. China's proactive response and internationally accepted data standards initiative, in November 2014, the Chairman Xi Jinping at the G20 summit in Brisbane officially announced that China will adopt the IMF Special Data Dissemination Standard (SDDS). After a series of technical preparations, the current standard conditions according to SDDS data published ripe.

Adopted SDDS, in line with our needs further reform and expand opening-up, help to improve the transparency of macroeconomic statistics, reliability and international comparability, promote the improvement of statistical methods; to further find out the macroeconomic real situation, as the country's macroeconomic provide the basis for decision-making to prevent and defuse financial risks; conducive to China's active participation in global economic cooperation, enhance the international community and public confidence in the domestic economy.

Three , according to the SDDS reserves data released specifically what?

A: The foreign exchange reserves, according to data released SDDS carried out, including the "official reserve assets" and "International Reserves and Foreign Currency Liquidity Data Template" in two parts. "Official Reserve Assets" includes the foreign exchange reserves, IMF reserve positions and special drawing rights (SDR), gold, other reserve assets of five projects, including "reserves" This project corresponds to the size of our country's foreign exchange reserves in the past announced ; "International Reserves and Foreign Currency Liquidity Data Template" includes four tables of official reserve assets and other foreign currency assets, the predetermined short-term net outflow of foreign currency assets and foreign currency assets or net outflow of short-term, memos.

On the publishing frequency, two pieces of data are released monthly, including "official reserve assets" not later than the seventh day of general release of the data at the beginning of each month on month, "International Reserves and Foreign Currency Liquidity Data Template" general release in the end of each month data. Since this is the first release, we have also released two pieces of data, to facilitate your control, according to the corresponding time in the future will be published separately requirements.

On statistical methods, in full accordance with IMF to carry out uniform standards relevant statistics.

Fourth, the comparative size of foreign exchange reserves in the past released the recently released data which points?

A: There are three main aspects:

  • (1) This announcement is fully consistent with the country's reserves of foreign exchange reserves in the past announced the size of caliber. The size of our country's foreign exchange reserves in the past has been published in accordance with the relevant methods and standards of statistics in SDDS. As of the end of June 2015, China's foreign exchange reserves of $ 3.69 trillion.
  • (2) new released other foreign currency assets. As of the end of June 2015, the Bank of other foreign currency assets of $ 232.9 billion.
  • (3) adjusted by the size of its gold reserves. As of the end of June 2015, the scale of China's gold reserves to 53.32 million ounces (equivalent to 1,658 tons).

Five , gold reserves according to data released this time, compared with the scale of China's gold reserves since the end of April 2009 increased by 604 tons. Why should our holdings of gold reserves?

A: The gold reserve has been an important element of international reserve diversification countries constituted the majority of the central bank's international reserves have gold, country as well. Gold as a special asset, with multiple attributes financial and commodities, together with other assets to help regulate and optimize the overall risk-return characteristics of international reserves portfolio. From the perspective of long-term and strategic perspective, if necessary, dynamically adjusted international reserves portfolio allocation, safety, liquidity and increasing the value of international reserve assets.

Six , in recent years, international gold prices volatile, the current round of holdings of gold reserves is at what time what channel from holdings? Whether the future will continue to overweight?

A: With the prices of other commodities and financial assets, the international gold prices also ebb. Over the past few years, gold prices continued to rise to a record high, the gradual decline. Our asset-based valuation and price changes for gold analysis, under the premise of impact and influence in the right markets, at home and abroad through a variety of channels, this part of the gradual accumulation of gold reserves. Overweight channels including domestic miscellaneous gold purification, production Shouzhu, domestic and foreign market transactions and other means.

Gold has a special risk-return characteristics, at a particular time is a good investment products. But the capacity of the gold market is small compared with the scale of China's foreign exchange reserves, if a large number of short-term foreign exchange reserves to buy gold, easily affect the market. At present, China has become the world's largest gold producer, is also a big consumer of gold, "hidden gold to the people," the situation has been happening. The need to continue and consider the future of private investment demand and international reserve asset allocation, flexible operation.

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Fri, 07/17/2015 - 06:43 | 6322764 Haus-Targaryen
Haus-Targaryen's picture

They left the 1 off the front of that number. 

Fri, 07/17/2015 - 06:55 | 6322783 Supernova Born
Supernova Born's picture

What are they trying to achieve with this false number?

The question to be asked.

Fri, 07/17/2015 - 06:56 | 6322790 Haus-Targaryen
Haus-Targaryen's picture

Everyone knows they are amassing huge amounts of gold.  Their old number was clearly garbage, and everyone knew it.  

They had to raise it just enough to placate people.  Guarantee you their actual holdings are still higher than reported today.  

Fri, 07/17/2015 - 06:59 | 6322795 Supernova Born
Supernova Born's picture

All warfare is based upon deception

-Sun Tzu

All deception is negated by my terminal

-Bloomberg

Fri, 07/17/2015 - 07:05 | 6322804 VinceFostersGhost
VinceFostersGhost's picture

 

 

Looks like China owns our asses.

 

Supposedly the US has some gold...but I've never seen it. Neither has Germany.

Fri, 07/17/2015 - 07:11 | 6322814 Kotzbomber747
Kotzbomber747's picture

My big problem with this: how much merit do ANY numbers or percentages coming out of China have?

Doesn't their economy also grow with 7% p.a.? Hmmmm...

Any conspiracy thinker who has doubts about the U.S. gold reserves in Fort Knox should have a field day with any official statistic coming out of China with regard to their gold reserves.

Fri, 07/17/2015 - 07:11 | 6322817 Pladizow
Pladizow's picture

Why release info now at support of $1,140/oz?

Fri, 07/17/2015 - 07:14 | 6322823 froze25
froze25's picture

Anyone else notice that all the 10oz bars of silver are on a delayed shippment from SD Bullion?  Physical stocks running low?  Has anyone seen if the other dealers are showing the same type of delay?

Fri, 07/17/2015 - 07:20 | 6322833 VinceFostersGhost
VinceFostersGhost's picture

 

 

I've got some scraps I can sell you...but anything of real quantity.....no can do.

Fri, 07/17/2015 - 07:32 | 6322872 papaswamp
papaswamp's picture

Scrap is where its at!

Fri, 07/17/2015 - 08:13 | 6322972 Manthong
Manthong's picture

VFG.. Germany does not want to see it..

Oops, I mean Merkel and Crew.   the German people will have their way with DE .gov when  they get over the beer binge and understand what the EU has been done to them.

 

Fri, 07/17/2015 - 08:40 | 6323070 Save_America1st
Save_America1st's picture

and the paper PM's are getting monkey-hammered now right on queue!  Time for another roll of silver Buffs!

Fri, 07/17/2015 - 08:50 | 6323102 J S Bach
J S Bach's picture

"China Increases Gold Holdings By 57% "

 

Yes... and I'm sure their tungsten holdings increased by at least 200% in that same time!

Fri, 07/17/2015 - 08:59 | 6323135 Save_America1st
Save_America1st's picture

no, they've got the real deal.  Remember that all gold that has gone to China has first be re-melted down in Switzerland and re-cast into Chinese Kilo bars of five 9's purity. 

China hasn't been fuckin' around.

And conservative estimates are that they've now stock-piled at least 10,000 tons or even upwards close to 30,000 tons of gold. 

Fri, 07/17/2015 - 09:00 | 6323172 BaBaBouy
BaBaBouy's picture

Chinee Report Only GOLD 604 Tonne Increase Over 6 Years ???

==> They Are SUPER SENSITIVE To The Markets And NOT TO INCREASE THE SPOT POG, So As They Can Keep Accumulating.
Imagine If They Had Reported The True 3250 Tonne Increase???

IMO They Will Reep Reporting Large Monthly Increases Until They Reach The Huge Number Of GOLD They Actually Have Already!

Fri, 07/17/2015 - 09:20 | 6323256 PrayingMantis
PrayingMantis's picture

 

 

... the point of the whole exercise is, (regardless of what China's true gold holdings figure was), China is telling the world the Renminbi (Yuan) is backed by solid physical gold with a huge manufacturing base (read: US companies that moved their manufacturing base in China ... like AAPL, etc.)  ...

       ... whereas the US dollar (Petrodollar) is backed by "paper" gold, ObamaScare, $70Trillion derivatives, $18Trillion debt, MSM propaganda, BHOliesandpromises ... etc.

 

       ... China is also telling the USSA that China's economy is robust and stable so that they could export more in order for chinese-hating redneck shoppers at Walmart could stuff their gills and their Made in China recycled bags with Made in China goodies and trinkets while ignoring their Made in China labels and opt for the 95% difference in price compared to the flag-waving-stars-and-stripes-made-in-the-good-ol-usa higher-priced trinket ...

           ... and China is also reassuring the USSA that those "fake" Chinese electronics gear the USSA bought and used in USSA military would remain dirt-cheap to encourage the smart-monied military brasses to buy more of the "counterfeit" stuff then try to hide them from military audit or CONgress   >>> "‘Made in China’: U.S. Military Finding Fake Chinese Electronics in Gear At Alarming Rate" >>> http://www.theblaze.com/stories/2011/11/09/made-in-china-u-s-military-finding-fake-chinese-electronics-in-gear-at-alarming-rate/  ...

 

 

Fri, 07/17/2015 - 10:21 | 6323432 Pinto Currency
Pinto Currency's picture

 

 

Over the past 8 months, Chinese wholesale gold consumption has averaged ~ 50 tonnes per week as measured in gold bar withdrawals from the Shanghai Gold Exchange vaults:

https://www.bullionstar.com/blogs/koos-jansen/strong-withdrawals-mainland-hong-kong-gold-vaults/

The Chinese government buys directly through Shanghai and does not disclose weekly purchases.

Global weekly mine production is 55 tonnes per week.

From 2008 to today there have been ~ 9,000 tonnes withdrawn from SGE vaults.

Fri, 07/17/2015 - 10:25 | 6323562 Manthong
Manthong's picture

“ravenous buying of physical gold”

“Then this ebony bird beguiling my sad fancy into smiling,
By the grave and stern decorum of the countenance it wore,
`Though thy crest be shorn and shaven, thou,' I said, `art sure no craven.
Ghastly grim and ancient raven wandering from the nightly shore -
Tell me what thy lordly name is on the Night's Plutonian shore!'
Quoth the raven, `Nevermore.':

-Edgar Allan Poe

if they have less than 10,000 tons, I will be beguiled

Fri, 07/17/2015 - 11:10 | 6323749 whotookmyalias
whotookmyalias's picture

Ah yes, the Chinese government.  A very trustworthy body indeed.  Let's all believe them and rush towards a gold backed currency that has no provision for conversion.

 

I hate to break it to you, but you can't really see the great wall from space either.

Fri, 07/17/2015 - 11:40 | 6323763 Manthong
Manthong's picture

Not exactly correct if you have the right optics....

http://www.nasa.gov/vision/space/workinginspace/great_wall.html

..but you can see the pollution cloud over Peking..

.. and gold is a reserve that will be hard to value properly when the synthetic structures evaporate.

Fri, 07/17/2015 - 11:55 | 6323940 whotookmyalias
whotookmyalias's picture

The urban legend was that the Apollo astronauts could see it when circling the earth with the unaided eye.  That is not true.  Of course with the right optics.

 

Fri, 07/17/2015 - 13:54 | 6324379 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Like all good propaganda, what you say is half-right, so it's believable, but the wrong conclusion is drawn. Yes, the Chinese government can't be trusted to accurately report gold holdings, but the lie is to suppress the price of gold while they continue to accumulate.

Fri, 07/17/2015 - 14:49 | 6324564 MonetaryApostate
MonetaryApostate's picture

I hear dragons hoard gold, but what is gold really worth when the elite plan on collapse the whole shebang?

Yes, 7 years into this depression and nobody gets the economic games the wealthy are playing here, the trickle down economics are working beautifully, and the wealthy packed up shop and went back home to London...

BUT, it will be the London Bankers falling down this time!
http://galeinnes.blogspot.com/2015/07/social-herds-economic-turds.html

Fri, 07/17/2015 - 19:37 | 6325608 bigkahuna
bigkahuna's picture

barbarous relic

Fri, 07/17/2015 - 14:19 | 6324486 summerof71
summerof71's picture

Of course the market tanked today too...

Fri, 07/17/2015 - 20:06 | 6325678 Squid-puppets a...
Squid-puppets a-go-go's picture

yer, methinks they havent announced enough of an incerease to reassure their domestic market at all. And its not enough to compell the IMF to give them a louder voice at the table.

So unless its about a planned steady release of updates each month, i struggle to see the utility of the move

Fri, 07/17/2015 - 09:01 | 6323181 idea_hamster
idea_hamster's picture

Did someone say they asked for comment via fax?!

Barbarous relic, indeed!

Fri, 07/17/2015 - 09:08 | 6323154 BaBaBouy
BaBaBouy's picture

Ahhh... Who To Trust???

COMEX And Their Paper GOLD Papers.

NYC FED And Their Underground GOLD Stocks Unaudited.

Fort Knox GOLD Storage Unauditesd.

Chinee And Their LOW GOLD Numbers Unaudited.

Ahhh... Who To Trust???

Fri, 07/17/2015 - 09:35 | 6323328 Sages wife
Sages wife's picture

In gold and silver we trust. Physically.

Fri, 07/17/2015 - 07:34 | 6322876 A82EBA
A82EBA's picture

APMEX offers seven brands of 10 oz bars with no mention of delay

Fri, 07/17/2015 - 07:43 | 6322881 Supernova Born
Supernova Born's picture

Premium increases have exceeded spot price decreases on silver eagles recently.

Fri, 07/17/2015 - 07:54 | 6322917 A82EBA
A82EBA's picture

Yes, a lot.  Great point.

On May 29 I bought ten 1oz rounds at spot price $16.70 and the check I wrote was $107.

Today, at spot $15 (10% lower) the total is $177 (65% higher)

Fri, 07/17/2015 - 07:59 | 6322921 Supernova Born
Supernova Born's picture

Whoa. Thanks for the numbers.

Fri, 07/17/2015 - 08:03 | 6322939 Manthong
Manthong's picture

Oh yeah..

Like they did not amass more than the fictional 8,000 tons Au the US supposedly has.

I smell some reality coming.

But of course, the US .mil Asia pivot will counter the Chinese tiger.

LOLOLOLOLOO

Fri, 07/17/2015 - 09:13 | 6323225 Save_America1st
Save_America1st's picture

just picked up 20 more oz's of silver Buffaloes from SDBullion for 342 total which included shipping and CC charge of 3%, and 1.29 over spot.  No mention of delay. 

Fri, 07/17/2015 - 11:22 | 6323804 Manthong
Manthong's picture

Try placing an order for couple 28,000 or so.

Size matters.. ask my girlfriend.

Fri, 07/17/2015 - 20:19 | 6325707 TheReplacement
TheReplacement's picture

I asked.  She didn't really like something this thick.

Sorry.

Fri, 07/17/2015 - 08:26 | 6323020 deadelephant
deadelephant's picture

At a spot price of $16.70 you bought rounds for $10.70/oz?  The big question I have is what type of weapon you used in that robbery.  Would love to get the same deal.

Fri, 07/17/2015 - 09:14 | 6323141 A82EBA
A82EBA's picture

Good eye, my mistake, qty was 5 not 10

spot down 10%

total down 8%

 

thank for catching that

 

edit: just bought a 10 oz for $170.80 out the door

 

Fri, 07/17/2015 - 19:20 | 6325533 Supernova Born
Supernova Born's picture

APMEX must read ZH as premiums seem to have very recently dropped.

 

 

 

 

Fri, 07/17/2015 - 10:57 | 6323682 Professor Know ...
Professor Know Nothing's picture

On Monday APMEX price above spot for 10 oz silver bars was 7.5%. Now 11.4%. For 100 oz silver bars the price was 5.7% above spot, now 7.5%. Break paper market, break!

Fri, 07/17/2015 - 11:18 | 6323787 phoggy
phoggy's picture

I always use a company out of Kansas called SilverSaver. www.silversaver.com  Been using them since 2012, they never have any issues with inventory.  They ship anywhere in US and Canada.

They also have an automated system that allows people to dollar cost average into silver/gold by setting a schedule.  This is good for people that just want to save on a schedule.  For example, I do $50 every Tuesday.  It automatically is taken from my bank account and $50 of silver is deposited into my account.  Then when I want to take delivery, I go into my account and request delivery of whatever specific item(s) I want.

If the market price drops and I want to load up, then I can do a onetime purchase or wire money in.

Easiest and most convenient way to buy gold/silver that I found.

 

Fri, 07/17/2015 - 07:36 | 6322877 Fukushima Fricassee
Fukushima Fricassee's picture

Gainsville coins has been "extremly busy" show room reflects very low stocks.

 

US Our tax dollars are wasted selling paper gold.

Fri, 07/17/2015 - 08:39 | 6323069 indygo55
indygo55's picture

Delays are everywhere. I had a delay on a 100 oz bar of a few days but I got it. My local coin store is OUT. No eagles or maples or bars of any kind at all and premiums are $5.00 each when they come in upon special order. No dates of delivery are available. 

Fri, 07/17/2015 - 10:07 | 6323402 Bunghole
Bunghole's picture

Silvertowne also has the same warning

Due to high demand for silver, shipping times may be longer than usual.

Fri, 07/17/2015 - 10:27 | 6323568 e_goldstein
e_goldstein's picture

My local dealer got 20 10 oz silver bars in on Wednesday,

I went in on Thursday to buy a couple and they were gone.

Fri, 07/17/2015 - 12:04 | 6323968 lunaticfringe
lunaticfringe's picture

Don't burn your powder just yet. We still have 100 bucks worth of gold downside left and maybe hi 12's in silver. Wait another month and then buy more. I have been comfortably sitting on the sidelines waiting for this current carnage and 4.5 year bear market to come to an end.

 

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