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China’s Central Bank Buys Another 14 Tons of Gold … Bullion Falls To 3 Month Low

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China’s Central Bank Buys Another 14 Tons of Gold … Bullion Falls To 3 Month Low

- PBOC declared gold reserves now about 55.38 million troy ounces or 1,722.5 metric tonnes

- Central bank gold rose to $63.26 billion by end-month - less than 2% of $3.53 trillion FX reserves

- China disclosed on July 17th that its gold holdings had surged 57% since 2009

- China officially owns around 1,720 tonnes of gold  –  true total figure likely much larger

- China’s total gold holdings likely higher as also owns gold in CIC


China’s central bank likely added another 14 tonnes of gold to its reserves in October as the People’s Bank of China (PBOC) continues to allocate to gold bullion as part of a plan to diversify its massive $3.53 trillion in foreign-exchange reserves and position the yuan as a global trading and reserve currency.



Gold prices rose 2.5 percent in October but fell nearly 5% last week on continuing speculation of a possible Fed interest rate rise. Despite, much poor U.S. economic data in recent weeks, the positive jobs number on Friday saw safe haven gold fall.

Based on the London Bullion Market Association (LBMA) afternoon gold price on the last trading session of October, China's reserves likely totalled 55.378 million troy ounces or 1,722.5 tonnes at the end of last month. That would be an increase of about 14 tonnes from September. The PBOC reveals the dollar value of its gold reserves early in the month, before revealing the volume numbers later on.

China’s gold reserves rose by about 15 tons in September, 16 tons in August and the highest monthly purchase was nearly 19 tonnes in July.

China disclosed on July 17th that its gold holdings had surged 57% since 2009. China has overtaken Russia to own the world’s fifth-largest national gold reserves. China is the world's sixth largest official sector gold holder after the United States, Germany, the International Monetary Fund (IMF), Italy and France.

The United States, believed to be the top holder of gold with more than 8,000 tonnes of bullion, has 73 percent of its total foreign reserves in gold, according to the World Gold Council (WGC). These reserves have not been audited in decades leading to some concerns about the exact amount of unencumbered U.S. gold reserves.

The value of China's gold reserves stood at $63.261 billion at the end of October, compared with $61.189 billion at the end of September, the People's Bank of China (PBOC) said on its website. Gold still makes up a tiny fraction - less than 2 percent of China's total foreign exchange reserves at $3.53 trillion.



The U.S. and Germany’s gold reserves are believed to be 74 percent and 68 percent of total fx reserves respectively.

This means that the PBOC reserve diversification into gold is likely to continue and indeed could accelerate should relations with the U.S. further deteriorate or in the event of a Chinese financial crisis or another global financial crisis. Both of which we see as likely.

China should increase its gold holdings to about 5 percent of its total reserves to help diversify currency risks, a WGC official said this year. China previously considered its gold holdings a state secret and did not report its holdings on a monthly basis to the IMF like Russia and most other countries.

It has begun doing so as it campaigns to include the yuan in the IMF’s special drawing rights basket. Before the June update, China had last revealed its gold holdings in April 2009. Then, China ended six years of mystery over how much gold it’s central banks holds as it seeks to position the yuan as a global reserve currency and for greater global use of its currency in international trade. It is also pushing for the yuan to be included in the International Monetary Fund’s Special Drawing Rights basket.

We believe the 1,700 metric tonne PBOC gold reserve figure is an understatement of total Chinese official and governmental gold holdings.

There have been enormous volumes of gold imported through Hong Kong – and through Shanghai in more recent years – and indeed very large amounts that have been produced domestically and remained in China. China is now also the world’s largest producer of gold.

It is important to remember that other entities, besides the PBOC, have also been buying gold – namely the China Investment Corporation (CIC). China has been accumulating gold bullion quietly through the CIC – indeed they have been buying hundreds of gold mines in South America, Africa and internationally in recent years – securing another important source of gold supply.

If the combined holdings of the PBOC and CIC were added together, China may well be the second largest holder of gold bullion – after the U.S. – assuming that U.S. gold reserve figures are accurate.

It is likely that, in total and between the three China’s financial institutions, China may in fact be holding much more than 3,000 tonnes of gold.

China is playing the long game and they could be low balling their total gold holdings – official central bank reserves and non official, governmental holdings – in order to maintain confidence in their substantial US dollar holdings and to aid their bid to join the IMF.

Central banks internationally still hold physical gold as financial insurance. Investors and savers should do the same and have an allocation to gold bullion outside of the banking system, in the safest vaults in the world.


Must-read guides to international bullion storage:

Essential Guide to Gold Storage in Switzerland


Essential Guide to Gold Storage in Singapore


DAILY PRICES

Today’s Gold Prices: USD 1095.60 , EUR 1015.90 and GBP 725.95 per ounce.
Friday’s Gold Prices: USD 1107.70, EUR 1018.81 and GBP 731.64 per ounce.

(LBMA AM)

Gold in USD – 10 Years

Both gold and silver suffered equally this week with both metals closing about 5% lower overall. Gold lost $15.50 to finish at $1088.00, a loss of 4.69% for the week. Silver lost 5.06% on the week to close at $14.74. Platinum lost $8 to $938.

Gold is ticking higher this morning, trading near $1,093/oz but remains near a three-month low of $1,084.90 reached on Friday.

Read more on the GoldCore.com blog

IMPORTANT NEWS

China’s gold reserves likely rose by 14 tonnes in October – Reuters

China Probably Raised Gold Hoard Again in October Adding 14 Tons – Bloomberg

Gold Plunges Most in a Year This Week on `Darn Strong’ Jobs Data – Bloomberg

Dollar Surges, Bonds Drop on Rate Speculation; Banks Rally – Bloomberg

Gold sinks 7 sessions in a row, loses 4.7% on the week – MarketWatch


IMPORTANT ANALYSIS

China Buys Another 14 Tons Of Gold In October As FX Reserves Unexpectedly Rebound- ZeroHedge

Competition for the Fed’s Money Monopoly – WSJ (Sign-in required)

“First They Came for the Pennies…” in the War on Cash – Wolfstreet.com

Bad news for savers – the financial repression is set to continue – MoneyWeek.com

Japan: “Monetisation would open a Pandora’s box of economic risks” – Economist


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Mon, 11/09/2015 - 21:16 | 6770328 kuro_neko
kuro_neko's picture

Gold should go down more, as the FED is normalizing rates.

who wants to store gold with storage fees and depreciating everyday while your $$ earns interests or buy ever-ascending equities ?

you can't even eat gold

Mon, 11/09/2015 - 20:20 | 6770110 Contrariologist
Contrariologist's picture

I, for one, am looking forward to the Great Comeuppance, whence the Big Bully gets knocked down a few trillion notches, and the arrogance of the USA is put to rest, hopefully forever, maybe like it happened to France. I hope I live to see it. Clearly Russia is no longer fearful of direct confrontation, and China never was!

We're gonna step on our collective wee-wee once too many times, and find ourselves up against a real army, a real adversary, not just a bunch of rag-tag, dirt-poor, near-homeless Muslim chicken farmers. And we'e gonna lose, lose big, lose permanent. The sooner the better...

Mon, 11/09/2015 - 20:15 | 6770088 Fukushima Fricassee
Fukushima Fricassee's picture

Yellen is not hUman she is an evil knome or some such shit from bernake's troll ass .

Mon, 11/09/2015 - 19:04 | 6769831 alexcojones
alexcojones's picture

Wish I had the power to print paper endlessly

And then buy something that has REAL Value.

OR raid countires that had gold (Libya) and steal it

Mon, 11/09/2015 - 17:44 | 6769469 Dragon HAwk
Dragon HAwk's picture

I figured it out... the Central banks want to keep it all in their vaults so we don't have it available on the planet to use as Money..

Mon, 11/09/2015 - 16:42 | 6769153 Wow72
Wow72's picture

We are helping our possible enemies get all the gold at cheap prices.... does anyone see this as a national security issue at this point?  Its clearly Ass Backwards.

Mon, 11/09/2015 - 15:39 | 6768884 Augustus
Augustus's picture

Gold is sure an oddly priced commodity.  All of these large buyers of the physical metal and the mines have caused the prices to decline.  Reports of large quantity buying brings price declines.  Who knew that commodity prices responded in that manner?

 

"It is important to remember that other entities, besides the PBOC, have also been buying gold – namely the China Investment Corporation (CIC). China has been accumulating gold bullion quietly through the CIC – indeed they have been buying hundreds of gold mines in South America, Africa and internationally in recent years – securing another important source of gold supply."

Mon, 11/09/2015 - 17:43 | 6769452 Rex THT
Rex THT's picture

why ask why

just buy buy buy

Mon, 11/09/2015 - 15:36 | 6768871 SSRI Junkie
SSRI Junkie's picture

it's weird how gold goes down whether it's being bought up or being sold....doesn't seem to matter

Mon, 11/09/2015 - 14:44 | 6768623 LowerSlowerDela...
LowerSlowerDelaware_LSD's picture

Good thing demand for gold is booming, driving prices down.

 

Oh... wait.

Mon, 11/09/2015 - 22:09 | 6770485 roddy6667
roddy6667's picture

Just what I was thing. Several times a year China, Russia, and India buy more than the year's worldwide gold production. Demand has never been higher, yet prices stay low. Something smells rotten.

Buy that barbaric relic for the time when the TPTB can't maintain the fix any more.

Mon, 11/09/2015 - 16:36 | 6769147 Wow72
Wow72's picture

Makes perfect sense!

Mon, 11/09/2015 - 15:09 | 6768749 KnuckleDragger-X
KnuckleDragger-X's picture

It's that sleek and modern paper gold. The old yellow shiny is only for those of us with a barbaric tendency......

Mon, 11/09/2015 - 15:13 | 6768764 RaceToTheBottom
RaceToTheBottom's picture

Barbarians at the Gate!!!

Mon, 11/09/2015 - 14:33 | 6768554 arbwhore
arbwhore's picture

Still too many spec longs in the PMs. Gold might bottom at $1030 if specs can get down to the 25k area or less.

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