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‘My Bailout Is Bigger Than Yours’ – China Is Buying More Time To Buy More Gold Before Joining The SDR-basket
Every western media outlet was reporting about how the Chinese bubble was deflating at an extremely fast speed as its stock market decreased by 30% from 5,200 points to roughly 3,500 points before rebounding towards 4,200 points. It seemed like the world was heading towards Armageddon until the Chinese government stepped in to rescue the Shanghai Stock Exchange.
Source: stockcharts.com
It quickly instated new measures to ensure the stock market would have a ‘soft’ landing. The Chinese government announced pension funds were suddenly allowed to purchase shares which suddenly generated almost 100 billion dollars in additional support for its falling stock exchange. This first step wasn’t enough, and the Chinese government asked/forced the brokers to step in by pumping an additional few dozen billions of dollar in the market to stop the freefall. In its final move, China has instructed a $483B state-owned fund to start purchasing shares on the open market to ensure there’s a bidder for stock other people want to dump.
According to a professor at the university of Beijing, the total amount of stimulus provided by the central government was $1.6 trillion dollars, in just a few weeks/months time, and that’s massive. Keep in mind the total program of the USA to save its banks through the Troubled-Assets Relief Program (TARP) had a size of less than half of that.
Source: thenewsdoctors.com
The extremely strong reaction from China teaches us two things. First of all, China is prepared to unleash everything it has got to stabilize its stock market. It really tells you it will do ‘whatever it takes’ (where have we heard that before?) to stop the crash. Did you hear that, Super-Mario? If The ECB’s ‘plan’ was a ‘bazooka’, how would you describe the Chinese plans?
Secondly, there’s another reason why China wants to stabilize its stock market as fast as possible. As we reported before, the country is currently in discussions with the International Monetary Fund as it wants to get the Chinese Yuan to be included in the package of the Special Drawing Rights-system. If this would happen, the influence of the American Dollar would very likely decrease.
Source: goldbroker.com
According to our most recent information, the IMF officials seem to be quite receptive to include the Yuan in the SDR-basket as it’s indeed a relatively strong and stable currency – but of course, if the stock market plunges, its entire application gets discredited. The initial report of the IMF comments the Yuan definitely is a ‘significant currency’ but that it isn’t sufficiently tradeable just yet.
But the IMF is definitely charmed. The review of the SDR basket usually happens once every five years, but now the International Monetary Fund is willing to review the situation again in just one year, and this could already be seen as a victory for China.
On top of that, China now gets an additional 17 months to continue to buy physical gold on the open markets and that’s an opportunity China won’t ignore.
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I Own a Bridge in San Francisco I'll sell Real Cheap!
A few years back I was hearing the big banks had a humongous short in the silver market at a $9 strike. It's been heading in that direction.
If the owners of China think they will ever be first class members of the Eurotrash club, they are dreaming.
Almost like the the Chinese purposely asked the IMF to not add the yuan for a year. But for that to work out for the Chinese the price of Gold would have to drop by something like $150. Let's see. Gold was $1225 in mid-May, and recent lows were about $1080. That's only a $145 drop - so it can't be true!
Uh didn't the IMF (US) TELL the Chinese to reform more, give it another year. They didn't accept China. Sounds like a BS headline to me.
As physical is depleted from the visible pools, the question is: how low can the price go before no one will part with physical?
China wants 7000 tons which is more than it can possibly get in any reasonable time frame at today's price. If they bid for physical the price will sky rocket. The bullion banks, hedge funds and CB can sell all the paper they want but if they sell too much it will kill the entire gold derivative market.
They are playing a delicate game...they must discourage the use of gold as a store of value for the peons but ensure there is adequate physical to keep up appearances that a market still exists. GLD and Comex inventories are about half of what they were in Jan 2013. They seem to have enough physical for a while longer but who knows how much of the remaining inventory is actually available for delivery. We also don't know how low the POG can go before the whole thing seizes up.
My guess is that we are close.
they must discourage the use of gold as a store of value for the peons but ensure there is adequate physical to keep up appearances that a market still exists.
Isn't China encouraging their people to own gold? I see a massive opportunity for a wealth transfer from West to East brewing. China and India hold massive privately held gold. Western debt-laden currencies collapse, gold buying power rises, instant large increase in middle classes and buying power. Gold may be money, but it is also capital. Think of the thousands of tonnes of privately held gold in India, hanging around the necks of their women.
its more a matter of psychology. there could be no gold for sale at todays price, if the psychology changed. which is to say the price in entirely disconnected from the market
"According to a professor at the university of Beijing, the total amount of stimulus provided by the central government was $1.6 trillion dollars, in just a few weeks/months time, and that’s massive. Keep in mind the total program of the USA to save its banks through the Troubled-Assets Relief Program (TARP) had a size of less than half of that."
~$700 billion or so, is all that Boobus Americanus was made aware of, through tightly controlled media spin at the time.
$Scheisse money was flying out of every Fed teller window imaginable - some obvious, most NOT, and various 'soft-QE' programs exist to this day that few are aware of and that exist under carefully crafted means. Shit, if the shenanigans at 'Medley' can't even be uncovered - well, you get the picture...
Now onto China itself:
The growing 'consensus' is that China wishes badly to be accepted into the 'Club of Rome', and we all know the direction of a lopsided consensus... If in fact China does have physical gold holdings under its ownership that exceed 10,000 tons, and they have already paved the way via relationships with surrounding regions in the scheme of a much larger 'economic trading bloc' of nations, why in the bloody hell would they need (or want) 'acceptance' into an IMF scheme...? They'd forever be a 2nd tier 'coolie' anyway, as the Western banking establishment would Never allow an Oriental nation to sit atop the IMF. And this doesn't even take into account, the growing geopolitical rift between the United States and China...
Removes another Russian ally.
Brings one more big nation into the global (NWO if you perfer) scheme.
No matter how you slice it, the Bankseters rule.
As long as there are banks they will continue to reign.
ORLY?
TARP I
TARP II
"Twist"
then QE I and QE II
this is also Jim Rickards prediction. China wants to be the major holder in the SDR basket. you have to think they lost some time building their gold reserve while they were buying back their stock market. they may have even dumped some gold, and with gold catching a whiff of global deflation they might not find it prudent to buy more at this time. on Rickards list a stock market crash in China would cause deflation, followed quickly by inflation, but i think gold can go a lot lower. its a race against time, global deflation initiates gold selling, at the same moment the IMF begins handing out its new currency backed in gold (and nobody has any) the obvious solution for central banks is to short gold, but thats very tricky, because in this maladjusted market when the gold price drops supply vanishes, and it raises the question of a tipping point, gold = zero dollars and there is none for sale? come on. but the IMF is now in the drivers seat, and if this deal blows up its back to the caves for the human experiment
once in a lifetime opportunity to print and buy up the world. And everybody is doing it that can.
the problem with buying a deflationary crash is that prices keep falling. JP morgan tried to save the stock market in 29 and lost his ass. people start postponing purchases (consumer sentiment drops recent headline) everyone is conditioned to buy the V shaped bottom, but if you buy the V shaped bottom and its really an L shaped bottom, you end up going broke like everyone else
I don't think the global system will last 17 months. With commodities crashing and global debt soaring just to prop up "Markets" real production is grinding to a halt. The elites can print bullshit numbers and charts but they cannot print real production. When real production bottoms the people will be idle and thats when the fireworks begin. Thats when the culling begins, however they do it. Through war, EMP, disease, starvation, depression, etc. they will get their event. I am as frustrated and worn out as anyone out there but when this shit show ramps up it is going to be an historic event that will be written about for centuries. I say this fall it all falls apart.
it depends on how you define "global system" and they'll be changing it to something Orwell could appreciate. I used used to enjoy reading dystopian fiction, at least until the "fiction" part went away.....
this IMF SDR package is a Machievellian idea, the BRICs will be permanently second class nations, or it will excite a gold mining boom like the world has never seen, because most of the EMs dont have a quote gold reserve, China is trying to play the game, but would you sell your gold to some guy for 30yr UST bonds? i wouldnt. maybe at a 2-1 discount. the only thing remotely positive about the IMF deal from a global perspective is that the dollar will no longer be the reserve currency. but the US has the biggest seat on the IMF, so you think we just give away the store?
I'm thinking the IMF is lying.The Chinese got cold feet, or were just playing along
with the SDR scheme the whole time.The evidence all points that way.
Everybody is lying and the lies themselves are the only variation.....
conventional opinion is the chinese are lying. they have a lot more gold than they are officially reporting. conversation goes something like this, china to yellen, i need to buy up my stock market, and all i have is your worthless treasury paper. how about i dump it on the market. yellen to china, okay see you in belgium. or okay we'll give you some gold for your basket, and you keep those bonds. youd really like to be a fly on the wall,
Gee there is no shortage of puff pieces on gold around here.
I just want this game of Make Believe to END.
But even more Importantly we MUST NOT let those who created this mess to stay in ANY position of Power.
I am NOT just talking about their Puppets!