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China Bought Gold With Proceeds From Record Sale Of US Treasurys
Two months ago, when China stunned the world in announcing it had officially "bought" 604 tons of gold for the first time since 2009 (this was untrue: China merely admitted to the world what we had reported for years, namely that it had been patiently accumulating gold via untraceable accounts and only now decided to reveal a fraction of its total holdings), we said that, contrary to the wrong "one-and-done" pundit assessment, China would continue "adding" to its gold holdings. To wit:
... 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.
One month ago, we were proven correct when China indeed announced it had "added" another 19.3 tons of gold in July - even as it was dumping record amounts of Treasurys at the time as we previously reported.
Then, overnight, we got a second confirmation when the PBOC announced that China's official gold holdings had risen again in August, increasing by 520,000 troy ounces, or 16.2 tons (which is more than 3 times the entire registered gold inventory in the Comex vault system), and bringing the new total to 54.5 million ounces, or 1,694 tons of gold. In dollar terms, Chinese gold holdings rose from $59.2 billion at the end of July to $61.8 billion.
However, even as China is "buying" gold, it is still doing so at half the pace of neighbor Russia, which as reported several days ago added 1,000,000 ounces or about 31 tons in the same month, bringing its total to 42.4 million ounces, or 78% of China's holdings. Between China and Russia, some 47 tons of gold were purchased in the open market in past month.
Naturally, as has been the curious case for the past several months, the confirmation that China keeps buying gold merely served to push gold lower, and as of this moment gold was down to $1,117/ounce: the lowest level in two weeks.
A Commerzbank analyst had this to say about China's ongoing gold buying spree: "Given the size of Chinese currency reserves and the extent of its domestic gold production, even higher gold purchases might have been assumed. That said, the decrease in currency reserves may have put the brakes on buying interest of late, in August, currency reserves declined to a two-year low of $3,557.4 billion."
This is almost correct. The real message here is that in a month in which China (together with its Euroclear-held Belgium holdings) sold a record $83 billion in Treasurys...
... it had no qualms about rotating the sale proceeds into gold. Or at least that's what it was eager to telegraph with its "data."
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Wait, wait, wait. Technical foul. I thought it was well known China was merely announcing gold they had already purchased previously.
Am I mistaken? Did I not read such an article here?
Soon we're all going to see who's not wearing any swimsuits!
The tide is going out!
Alchemy - turning worthless paper into gold.
AND The POG Gets Hammered... Perfectly Executed And Right on Queue... Good Job Again FEDs..
Silver just completed a 2% "oh hell no" rejection of this mornings smackdown.
Glencore announced it would sell 1 billion worth of Ag&Au production forward in order to shore up its balance sheet.
Upon hearing this JPM said that wasn't sufficient, and foresees a 10 billion shortfall...hmmmm.... ok, so essentially it could be
said that "we'll short the fuck out of you till you sell as much production forward as we want" this doesn't look like a bullish
development--UNLESS some deep pockets step in to soak this up quickly. But what the hell do I know, Imuhnutjahb.
I'm not sure investing $650 million of the $107 billion sale of US bonds is really that big a deal. I think China is a pretty steady buyer of gold, month after month, year after year. But this doesn't look like any change to me.
How about FOFOA's concept of two-tiered gold sales? If China exchanged all those treasurys for gold (in large volume), that would put the price of gold at around $200,000 per ounce.
With the market made on the margins, and a tight free float in the physical market (which is where I'm assumming Cathay plays)
the 650 mil. could move the needle; or at least cause the paper pushers to earn their money keeping China in that sweet low price channel.
Slow and steady wins the race. If China tried to by $100 BILLION of gold - where would they get it without blowing up the low price of gold? Even a 10 billion buy would be problematic. But $650 million a month is under the radar. Like taking out $9,999 in cash out of a bank perhaps?
"Soon", I have a bad feeling, that, like everything else China "stocks up on and/or hoards" the price of gold is going into the toilet...history folks...not my opinion...China "hoards", the price RAMPS...and then plummets!
Coal, iron ore, copper, etc.,...all ended in tears.
Gold is money bra.
Which would you rather have in you stocking, a lump of coal or a lump of gold. See the diff;)
"Money is gold, and nothing else."
-- JP Morgan
"Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It"
- Alan Greenspan
Firebrander,
It's the paper price of gold that is going to zero. Actually, the market will probably break long before zero....perhaps somewhere just under $1000, who knows?
The price of physical gold however will be many thousands more an ounce when this happens.
Paper gold....toilet....yes.
Physical gold....entirely different story. You misunderstand this at your own peril.
The price of ANYTHING is determined by the ability to pay...period...the world is broke..they may want to buy gold, at some point, but good luck on that "1000's of dollars" an ounce wish.
I live in a upper middle class area... local furniture shop has to offer 0% financing just to get a $500 couch sold; you should see the lines at the in-store finance office...lined up out the door.
If China truly does start heavily buying gold, they will ramp the price...after that, I'll be betting on another Chinese "hoarding" debacle.
2012:
"China is hoarding copper. The country in Q4 added about 300,000 tons to its already impressive stockpile.
China’s purchases are far in excess of anticipated need. Estimates for growth in refined copper consumption this year are generally in the 6.0-6.6% range, well below 2011’s 8.5% increase and the 11.5% jump in 2010."
http://www.forbes.com/sites/gordonchang/2012/02/12/china-is-hoarding-cop...
2015
"Copper Crashes, In Danger Of Breaching 15-Year Support Level"
http://www.zerohedge.com/news/2015-07-06/copper-crashes-danger-breaching...
~~~~~~~~~~~~~~~~
2015
"China is hoarding Gold"
20XX
"China is dumping gold..."
I don't know what is with the down votes. Assuming China and Russia are acquiring massive quantities of gold (good idea), in the last so many decades I have been trading, whenever those asians show up as big buyers of anything, it is not uncommon for the prices to fall of the thing they buy, like real estate back in the day. Again, based on the same assumption, first, I agree gold and silver are the king and queen of money on planet earth, but the zionist 'bankers' are very aggressive bastards, not to be outdone easily. There is definitely a war going on here between the zionist west (like the darth vadar federation of planet earth) and the jedi's of the east (in this case, China and Russia). Any massive acquisition of real money, esp using the intrinsically worthless FRNs, is a repudiation of the FRN as a viable currency, and the monetary philosophy that undergirds it. The jews have only one weapon to fight back, and that is to slam the crap out of the FRN (and other fiat currency) value of the gold to maintain the illusion that the gold buyer made a 'mistake', and 'we're gonna make 'em pay!' sort of thing. But if I am Russia and China, you know what, I just don't f*ing care. I'll use all those worthless jew paper notes to buy up everything that is real and tangible. When it comes to gold (and to the extent they buy it) silver, they can re-create their own currencies backed by it, and for anybody who wants to trade with them better come up with something similar or they are SOL. Of course, the major contingency there is can Russia (probably) and China (not so sure) survive in terms of their own GDP prosperity *without* the FRN funny money based darth vadar zone's markets (which includes North, central, south America and all of europe, nobody cares about africa)?
Chinese/Russian fiat "backed by gold"...would you trust that?...would you trust, that if you (and maybe 1000's of others) showed up at the bank window, that they would convert the paper to gold?
Or would there be $1 in gold backing every $1000 of paper...and when you ask for the gold, you're branded a "Malicious Converter" and jailed?
Have you been to the beaches lately?...No one is really wearing a swinsuit...Many SHOULD be wearing SOMETHING.
I had looked forward to ogling Blythe's physique, but is was not to be, dag nabbit.
This article is just wild speculation until the Chinese announce that they are using treasury sales proceeds to buy gold, but I would never expect them to announce that.
fungible
Chinese buy 2 billion dollars worth of gold and sell 100+ billion treasuries? they could have bought 10 billion worth of gold without selling 1 treasury... Proceeds my balls...1 has nothing to do with the other. Both however are welcomed news.
"Makes sense to me Judge"
But gold is just a barbarous relic. Or a pet rock. And the Fed hates it. Why would the Chinese do that?
They hate us for our freedomz!
They hate us for our femboys (like Caytlin) .... er .... wait....
Please refrain from being so easily divided and distracted.
Ms. Jenner could have 8 pussies installed and it matters not a whit to your life or prospects. Keep your mind and focus on the enemy.
OK, OK.... Back to watching Dancing with the Mentally Impaired.
If they "hate us for our freedoms" then why did the recent survey of Musloids determine that the MAJORITY want the Consitution - (i.e. The Bill of Rights) - replaced with Sharia Law?...Hmmmmmmm?
Everyone knows muslims are 99.9999% statist idiots that simply want a "big-man" styled leader.
Just look at, oh I don't know, every single piece of shit country in the Middle East. Which is all of them.
right - don't they know that US treasuries are waaaay more valuable - irriots
Lacist
"he said the sherrif is near"
I've heard the FED has a donkey in a basement somewhere in Manhatten that craps out gold bricks if you feed him prumes.
True fact!
Where in God's name did that come from?
Y'all don't talk like that in public or people's gonna 'spect there's sumpin' not right witchya.
Because the Fed is always wrong, BUT NEVER IN DOUBT!
2 negatives don't make a positive
Apparently you're not an Economist.
Because the Fed is always wrong, BUT NEVER IN DOUBT!
.China "hoards", the price RAMPS...and then plummets!
China has been hoarding for years and the price has plummeted not ramped, Coal Iron ore and copper are not typically used as currency. And if we look at history nobody knows better than the Chinese that fiat currencies eventually fail. Go back and research paper currency during the Song and Yuan dynasty
Because as you say: "The Fed Hates it"
They don't like the competition so they try hard to suppress the price. real hard.
time for more chinese chemical plants to blow up
Soon to be revealed as a plot by alqaedaterroristsisisobamabinladen
I bought 10 Silver and 1 Gold Panda and China ain't gettin 'em back!
I got rid of some pandas a long time ago and the dealer seemed eager to have them which made me wonder if I had made a mistake. Is there some added collectors value to those coins or something? Just curious, I don't really care about collectors coins the only extra advantage I can see there is that they may be left out of confiscation legislation.... maybe.
Older Pandas were very low mintage.
You can check in various online stores how expensive they are today.
Fun fact: In mainland China, you can't buy Silver or Gold Pandas for "bullion" prices.
You'll get them with quite low premiums in Hong Kong though.
@ms no
"If I had made a mistake". Are you serious or did I miss the sarc/ tag?
My silver Pandas' buy was a novelty of sorts, only way to justify nearly a $10 premium over spot.
Invariably I've gone with Maple Leafs recently. Buck or more per oz. cheaper than Eagles.
I was paid well over spot so I didn't care, I was back buying more before long. I don't know much about collectors coins and so I don't bother with them in general, I only had bought those because they were all that was available at the time when I purchased them and they were little if I remember right, half ouncers I think. I know I got a fair price at the time so if I should have kept them...oh well.
Bullet trains zipping by on the New Silk Road riding a golden railroad track while I get an overpriced ticket on a 1920s technology Amtrac train.
welcome to the new soviet union
Ugly Soviet Shitheads of America
You're being overly dramatic. Those Amtrak trains were designed well after WWII. They'll get another update after WWIII.
No, actually a little lenient.
petrol-electric transmissions by the French (Crochat-Collardeau, patent dated 1912 also used for tanks and trucks) and British (Dick, Kerr & Co. and British Westinghouse). About 300 of these locomotives, only 96 being standard gauge.....
But I get your point.
But, But, look at our new 136 million a pop F-22, it can do loop de loops and bomb weddings so fast they will not be able to breed fast enough.
We took a train last weekend, just for fun. Amtrak.
My main complaint is the tracks. In todays 'privatized' world, the same company does not own the tracks as the rolling-stock.
The train was OK, I assume they were standard diesel-eletric locomotives, but the tracks were so wobbly I thought we were going to leave the rails at a couple of points along the journey. The train was Amtrak and the tracks were owned by BNSF.
Warren Buffett will make lots of investments to improve the track, just as soon as his corporate welfare checks come in.
They would be worth even more than 136 million each if they were able to fly when it wasn't VFR conditions ... or ... when there were no migs in the sky.
But you get fluoridated water, GMO foods, 1000 channels of mind-numbing TV, infinite porn, a captured media, infinite spying by the NSA and a war-mongering, lying President.
What else can a serf want?
To become cannon fodder for said war-mongering, lying president
People have kids for that; then they get mad if anyone disrespects their sacrifice by criticizing the war.
Hey! watch it pal! this is 'Murka!, and if I want to sacrifice my kids to feed Mammon's maw, that's my bidness!
and if'n you don't like it--then YOU CAN GET THE HELLL OUUT! You damn pinko. We're protctin' the promised
land don'tcha know!!
Law 38 - Think As You Like But Behave Like Others
Cheer the dullards throwing their children's lives away for the bankers, keep your own kids out.
"Think As You Like But Behave Like Others"
Is the internet a combination of thinking and behaving?
sort of a modern twist on the 'ol sacrifice your child to Molech kind of thing :)
Hey buddy, you got a problem with infinite porn? Serfs never had it so good!
Waves to surf on, naturally
what else: alzhemier's inducing agents distributed over population centers to cut down on medicare costs, social security costs, etc (I won't say the word but you know what it is)
Shit, hurry up and get the gold out of that train! Too funny.
Kill the petro dollar! Kill the petro dollar!
What's up with the ramp this a.m.?
"Everything is Awesome"?
End of quarter dressing?
you think that's markets (air) you are seeing (breathing) ?
EU and JP QE "threats" again.
and they really thanks the "algos" for lowered their price !!
Cheap gold for China
SLD $83 Billion treasuries and BOT $2.5 billion gold? the real question is where did the rest of the money go?
Poof in their stock market.
But who sold them the gold? Seriously, I would like to know. How does one procure so much physical gold?
you're right - look where the ball ain't. whose balance sheet is deteriorating rather than improving?
"SLD $83 Billion treasuries and BOT $2.5 billion gold? the real question is where did the rest of the money go?"
Dong Feng carrier killer missiles, MIRVs, and nuclear hyperglide weapons.
The program is called "trash to stash" !!!
We are getting close to the Oh Shit moment when somone goes to the big vault and there is nothing there to deliver....pretty soon the Clan will pull their gold out too....keep it close to home for protection....
China isn't buying all this gold for their health. The entire world economy will be shaken to it's core when the real purpose is exposed.
The gold-backed petro-yuan, then China can keep all their gold hidden in a secret vault that can't be audited, and export all their inflation for the next 100 years.
I think I've seen this movie before.
If W.G. Carrs words hold any truth in his book Pawns in the Game then there really is a division between East and West. Meaning that the big boys who do control everything never managed to influence the Commis in the way they wanted. Now it seems that the East is answering by breaking the Western hegemony bit by bit.
While China accomplished their debt a little differently than the west, they still got to the same place....
While I have no doubt that China is buying gold, expecting a "true" number from them isn't going to happen
We need a lost yanky gold train or a lost rebel gold train ! Dosent have to be true. Few crisis actors a train from old closed up theme park walla! We have a lost gold train gap!
Rome is falling...embrace for impact! Visigoths sacked Rome, who will sack Isreali led USSA?
AH-SO
China dumps US toilet paper...buys billions of dollars worth of actual gold...Comex price of paper gold drops...rinse and repeat.
Anyone see a problem here?
Do you mean gold colored tungsten ?! I don't think Chinese would mind about getting tungsten. They are used to fake stuffs
I see this happening soon and often as real gold gets harder to find....they will go to fake gold to keep the game going.
There is no shortage of gold.
There's 2,500 tonnes of new gold is mined every year. That's 200 tonnes a MONTH.
Yet only 300 tonnes is used industrially, and much of that is recovered.
There is no shortage of gold.
1 oz per person on Earth ... $2,000 ... and I have more than my fair share. Make gold money and you'll see a real serious shortage. Advantaged: Current holders of gold and gold miners. Disadvantaged: Everyone else.
Another golden moment for Chinese central planning...do not understand why the US is not printing money and buying gold..it is tough to make jewelry out of paper money...
Hey, its a free country....
The nice thing about gold is that is very liquid.As a world currency it is freely exchangeable into any fiat on the planet whenever necessary.
So is a barrel of oil. So what?
Let me know when you can take a plane trip with a barrel of oil in your pocket
Let me know when you can take a plane trip with a barrel of oil in your pocket
Ah! So money is something you can put in your pocket and take a plane trip with? Like pieces of paper that signify in-process trading promises?
It would be interesting to see you try to get on a plane with 10oz of gold in your pocket!
We should all mimic the Chinese and dump our FRN's for real money.
We should all mimic the Chinese and dump our FRN's for real money.
Define "real money".
Define "real money".
I suggest you retake the Zero Hedge kindergarten classes if you still don't know the answer.
anything that provides hard evidence of work performed and is not a promise. Gold for example
Gold for example
And oil for example? And double jams for example? And pork bellies for example?
The money you exchange every day is "not" hard evidence of work performed. It is "a promise to complete a trade".
All of your examples have been tried in the past, and mankind throughout the millenia have decided that precious monetary metals (gold and silver) were the best form of money. This is proven throughout the centuries as mankind has chosen to conduct trade using this medium of exchange because it meets all of the properties of "money."
From Richard Russell and the Dow Theory of Money:
(1) It must be durable, which is why we don’t use wheat or corn or rice.
(2) It must be divisible, which is why we don’t use art work.
(3) It must be convenient, which is why we don’t use lead or copper.
(4) It must be consistent, which is why we don’t use real estate.
(5) It must possess value in itself, which is why we don’t use paper.
(6) It must be limited in the quantity that is available, which is why we don’t use aluminum or iron.
(7) It should have a long history of acceptance, which is why we don’t use molybdenum or rhodium.
Only GOLD and SILVER fit all seven characteristics.
EDIT: http://hiddensecretsofmoney.com/videos/episode-1 is a great primer, despite Mike Maloney's hat.
All of your examples have been tried in the past, and mankind throughout the millenia have decided that precious monetary metals (gold and silver) were the best form of money.
The process I describe has never been employed in the past. If it had been, we would have detailed records of DEFAULTs and INTEREST collections. We don't have these ... anywhere.
Regarding attributes of gold and silver, you left out the big one!
There is not enough of it. There is only 1oz per person on Earth. That limits each person to just $2,000 worth of in-process trades. That's "not" enough.
And its corollary:
Supply and demand for gold vary all over the place. It's a degree of freedom traders should not have to concern themselves with. Further, it is something that is difficult to obtain and thus restrains trade.
And the proponents of precious metals tip their hand with their behavior ... witness the bi-metal money standard debates of the late 1800's. And your dismissal of rhodium (and I presume platinum and palladium as well) from candidacy in your enumeration below.
Now let's take your enumeration from your dogma:
From Richard Russell and the Dow Theory of Money:
(1) It must be durable, which is why we don’t use wheat or corn or rice.
(2) It must be divisible, which is why we don’t use art work.
(3) It must be convenient, which is why we don’t use lead or copper.
(4) It must be consistent, which is why we don’t use real estate.
(5) It must possess value in itself, which is why we don’t use paper.
(6) It must be limited in the quantity that is available, which is why we don’t use aluminum or iron.
(7) It should have a long history of acceptance, which is why we don’t use molybdenum or rhodium.
What an idiotic list of attributes and support for them.
Examine how much simpler it gets when you say exactly what money is, always has been, and always will be: "a certificate of an in-process trade".
Your contrivance can only benefit holders of gold and the miners of gold. It is a detriment to trade. You don't want the MOE to be a detriment to trade. Money was invented to allow simple barter exchanges over time and space. It is an enhancement to trade and the process employed should not inhabit that.
What are you talking about????? There is plenty of gold ... at the right price.
I suggest you retake the Zero Hedge kindergarten classes if you still don't know the answer.
Sign me up. Who's teaching it? A Mises Monk? A Keynesian Klepto?
Use your imagination, I'm sure you will get it sooner or later.
US treasuries will be soon like the Diners Card - not taken anywhere
Still better dead than Red.
Gold to the moon!
and bringing the new total to 54.5 million ounces
$80 per Chinese person. Pretty big deal huh?
only the tip of weird, ostensibly the gold will help Yuan become reserve currency in the IMF SDR swap, since ostensibly new issue SDR will be determined by gold held in reserve. those treasuries should have gone back to the US but instead the hedge fund whiz bought 50B? of them, and that makes the fed nervous. my view of this IMF deal is that it will kick the giant can down the giant road by expanding the global currency float, including bonds and of course derivatives on those bonds. the US will continue to monetize in dollars as well as SDRs, we hold the best seat on the IMF. the move is bad news for EMs which is why you are seeing commodities getting monkey hammered, and probably the biggest commodity for EMs is their labor. not sure when the deal takes place, part of the problem with the global economy is that china is becoming a developed nation being undercut by cheap labor in vietnam and india. the point of adding SDR is not being understood for what it is, the equivalent would be if the fed moved all its assets off balance sheet and then started QE4
@ the above comments looking at gold as a commodity China will cause to carter... Channeling FOFOA...the demand for money is unlimited. Have you ever heard of someone claiming they had too many FRNs in the bank? Once you truely stop seeing value through paper and count your money in gold you'll see that, for physical gold, as money (not a commodity asset), there is no upper limit to demand.
Is using $650 million of more than $100 billion in bond sales that big a deal?
Thumbs up to China
Sell the dollar , Buy the Gold
Chinese have so much brains
Dollar is gonna sink
It is the right time to sell all the dollars & Euros
& buy all the gold