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Guess What Else China Is Hoarding

Tyler Durden's picture




 

We already know that Chinese imports of HK gold passed all records in the month of April. It appears that the precious metal is not the only hard asset that China has set its sights on.

From BBG:

China imported a net 25.3 million metric tons of crude in May, or 5.98 million barrels a day, up 10 percent from April, customs data showed yesterday. The previous record was 5.87 million barrels a day in February. Purchases cost an average of $120 a barrel, compared with about $123 in April, the data showed.

And visually:

Perhaps it is not worth pointing out that one thing China is seemingly not hoarding is the USD.

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Mon, 06/11/2012 - 12:51 | 2515164 masterinchancery
masterinchancery's picture

Hmm.....Fortress China.

Mon, 06/11/2012 - 12:56 | 2515199 The Monkey
The Monkey's picture

Along with copper, soft commodities, etc. The question really is, what is China NOT hording.

Oil, again, will be a great short.

Same sentiment as the early 1970's. Who really knows where equilibrium supply & demand should reside?

Mon, 06/11/2012 - 13:13 | 2515266 CPL
CPL's picture

Last time that was historically was done was the Battle for the Red Cliffs in 3 AD.  The Han dynasty went apeshit politically and also was minting thinner pieces of silver (Chinese are historically users of silver, gold is a Euro/Arab thing) which was the equivalent of printing reams of fiat.  From what I've read, there was more pig iron in the coins than silver.

 

So the other two kingdoms in China at that time grabbed as many of the daily needs that their country slaves/folks/peasants needed in a giant stock pile.  Then proceeded to run a war of attrition.

 

They literally starved the Han dynasty to death.  Not with blockade actions, but by grabbing any resource being pulled from the ground.  The Han dynasty didn't know what hit it, nearly instant and fatal collapse.

 

History repeats as well as rhymes.  This time though there is only one "Han" counterpart on the modern world stage.  Don't need to fire a single shot if your target can't get the resources it requires and once the direction of the commodity flow is fixed by physical means (transport) and agreement.  There is nothing the target can do but wait and starve.

 

I would post links but google is loaded with a couple of thousand scholars papers on the subject.

Mon, 06/11/2012 - 13:34 | 2515344 Stoploss
Stoploss's picture

Let me guess, they all say it won't happen either, cause this time is different.. LOL..

Mon, 06/11/2012 - 14:16 | 2515476 Karl von Bahnhof
Karl von Bahnhof's picture

Do they prepare for something?

Mon, 06/11/2012 - 13:41 | 2515360 MarkS
MarkS's picture

What target would that be?  If you are talking the US you are wrong. 

Simply put, China doesn't have an ocean going Navy and is surrounded by choke points.  In fact, close the Mallacan Straights and China is screwed. US Navy can easily interdict any Chinese supply line and China cannot do the same. Theoretically, they could ally with Russia for raw materials, but they are historic enemies and that might push India (China's biggest future copmpetitor and rival) even further toward the US - and open an exposed Chinese border.

China decides to dump treasuries and China is screwed because their currency is pegged to it, the US is their second largest export market and the $US is still the world reserve currency. 

Like it not, the US and China have way too much to lose by being true adversaries...Complain about each other, sure.  Fight each other - bad idea.

Mon, 06/11/2012 - 13:57 | 2515400 insanelysane
insanelysane's picture

The US did use the military to destroy the USSR but not by using the weapons but by simply developing and owning the weapons.  The USSR had to divert too much resource in trying to keep up.  This led to unhappy citizens and a broke ass country.  China only needs to apply pain to US citizens or European citizens by denying them what they believe their governments should be giving them.  The rest takes care of itself and shots need not be fired.

Mon, 06/11/2012 - 14:32 | 2515542 W T Effington
W T Effington's picture

The USSR failed because of central planning. Not because we were better at developing bombs. Centrally planned countries always eventually fail. Period. The USSR would have failed even if they did not attempt to keep up with the U.S.A. militarily. The rate of failure is usually dependent upon the percentage of a countries' productive capacity which is centrally planned. The greater that percentage, the faster the rate of failure. The U.S.A. is on its way as well, unless we begin to revert back to freedom.

Mon, 06/11/2012 - 15:22 | 2515654 Zero Govt
Zero Govt's picture

perfectly stated W.T. Effington

Communism destroyed agriculture in the USSR (and Commie China) and any productive industry. The straw that broke Russias back was its only remaining profit centre, the export of oil. When oil bottomed at $12 a barrel Russia was completely fucked

the only battle the West engaged in with the USSR was in Afghanistan where the SAS trained the Taliban to fight gorilla warfare and the CIA armed them with anti-tank/helicopter missles. Once the Taliban started blowing up expensive pieces of Russian equipment bankrupt Gorbi had to pull them out as he couldn't afford the losses

Govt's kill nations, there's no other wrecker of economies than this institution of meddling idiots

Wars are Govt vs. Govt and are usually determined by which set of clowns makes the least mistakes (Hitler bit off more than he could chew in Russia -mistake No.1 - and mis-judged the Russian weather/winter - big mistake No.2)

Govt is a fucking joke, time to shut the shithole down

Mon, 06/11/2012 - 15:44 | 2515782 CharlieSDT
CharlieSDT's picture

Rule #1 of conquering Europe, do no invade Russia in the winter.  

Mon, 06/11/2012 - 19:21 | 2516320 StackAttack
StackAttack's picture

First rule of War Club.  Never fight a land war in Asia.

Second rule of War Club.  Never fight a land ware in Asia (when playing RISK).

Mon, 06/11/2012 - 22:29 | 2516770 TheObsoleteMan
TheObsoleteMan's picture

Agree with 99% of your good post, but Hitler COULD have easily defeated Russia, except he made one huge mistake which sealed his doom: Had he kept the SS out of Russia,and not torched entire villages, slaughtered the peasants and stole their foodstuffs, the soviet people would have joined with him. Hell, two million ukrainians joined the wehrmachct to fight Stalin. Had Hitler made the case for an independant Ukraine, it all would have been over before the winter snows fell. Of course after the war with Russia was decided, he could have renigned, and then took out the ukrainians. He forgot Caesar's rule of thumb; divide and conquer.

Mon, 06/11/2012 - 15:12 | 2515669 mjk0259
mjk0259's picture

Is there a non-centrally planned one that hasn't failed? Hasn't China been mostly centrally planned for thousands of years?

Mon, 06/11/2012 - 17:50 | 2516139 Umh
Umh's picture

I'm not going to look up history unless it's really important, but how many governments have they had in the last "thousands of years". I know the current one isn't very old(1949 if you start at Mao).

Mon, 06/11/2012 - 14:33 | 2515549 KickIce
KickIce's picture

The golden rule comes to mind here, as in he who has the gold makes the rules...

Mon, 06/11/2012 - 17:43 | 2516112 koperniuk666
koperniuk666's picture

Christ you Meerkans need to get out more. Even out of state would be an improvement over staying at home with mum.

The Chinese have NEVER had explicitly stated expansionist intentions. The have NEVER even implied expansionism by their actions. They are NOT COMING YOU FUCKING THICK WANKERS!.

No ones hates you Meerkans we just laugh at your uninformed naivete.

Yes they realise the USD is worthless pulp BUT THEY ARE NOT COMING!!!!

hhahahahaha 

 

Edit I ve been there AND to 80 other countries.

 

THEYRE NOT COMING!

Mon, 06/11/2012 - 17:59 | 2516158 Umh
Umh's picture

Tell the Tibetians maybe they will chime in on your side.

Mon, 06/11/2012 - 19:32 | 2516347 Ookspay
Ookspay's picture

Taipei?

Mon, 06/11/2012 - 19:39 | 2516363 DeadFred
DeadFred's picture

Simply put there are a multitude of articles recently about military changes by both the US and China that point toward preparation for a conflict. Why is the US deploying troops to Australia if not for worry about the Chinese military? Perhaps they think Sri Lanka poses a threat. There aren't many troops, but why any? The Chinese are developing and testing massed missle attack tactics which can overwhelm the US Navy's defences. There is no way they could gain control of the seas but they might make the sea lanes unavailable to both sides. Many reports recently have been stating the Chinese economy has been slowing down and use the massive stockpiles of unneeded commodities as evidence. If one sees a years supply of iron ore being dumped into huge piles is one looking at the malinvestments of a centrally planned economy or is one looking at war preparations? Time will tell but assuming completely peaceful Chinese intentions is about as foolhardy as assuming the Fed is only trying to help the US economy. The inside motivations and plans of both are hidden but a little paranoia is warranted.

Mon, 06/11/2012 - 20:32 | 2516478 prole
prole's picture

Why is the US deploying troops to Australia if not for worry about the Chinese military? Perhaps they think Sri Lanka poses a threat.

Probably because Bill Krystol or Lord Kissinger decided it would be a good idea? Besides "wasting money doing a whole bunch of stupid shiite" is the roll of "our" military these days.

(Besides preparing to massacre Christians in Syria shortly)

Wed, 06/13/2012 - 01:05 | 2520485 Tompooz
Tompooz's picture

@prole

While American troops in Australia may irk China, I guess the real purpose of that base is as half-way house for badly traumatized soldiers that cannot safely be re-integrated in American society.

Mon, 06/11/2012 - 23:48 | 2516978 oldman
oldman's picture

@MarkS

Marcus,

China's purchases remind me alot of what the survivalists are advising people to do

spend those dollars now and stock up while there are goods on the shelves

get into gold, silvert, copper, fuel, basic shit for survival

anyway, how do you go to war with nuclear weapons?

I don't think they will have so many dollars to dump after they complete their shopping

big advantage, too, in having everything you need and out of the ground

China, at least, looks like a survivor

And its currency may be gold based and appealing to many nations

Yeah, I could see the US nuking China

This is really a mess

Hoping I'm just having a fear fantasy---I get a little crazy reading these articles         om

 

Tue, 06/12/2012 - 00:45 | 2517039 oldman
oldman's picture

doop

Mon, 06/11/2012 - 14:24 | 2515505 W T Effington
W T Effington's picture

Your whole hoarding thesis would make more sense if we weren't each others biggest trading partners. Hoarding, as a military tactic, doesn't work so well when you sell all of your shit to the enemy for worthless paper. Just saying. Also, transportation is much more developed now than when Jesus was walking the earth so if China won't provide the raw goods for manufacturing, someone else will. They don't have a monopoly on their trading partners access to raw goods like the Chinese dynasties had upon each other. The world is global not local. I think they are simply trying to protect themselves from inflation. Albeit, in half measures, since they still print like crazy and accept what we print like crazy.

Mon, 06/11/2012 - 15:05 | 2515644 CPL
CPL's picture

Here's the thing about historical relationships with China over the last 8000 years of recorded history.  They aren't "partners" like you would like them to be.  It is a relationship of convenience, nothing more.

 

Like the US had a "partnership" with the Contra's in the 80's...

 

Any case the teacher will school the tiny, short lived country called the USA and Russia.  The super powers on this planet if glimpsing at human history IS China and India.  It has nothing to do with the blip on the radar around the middle east and the euro thuggery/piracy or nukes or armies.

 

It has to do with recorded history, the one with the longest story wins and it sounds like you have a severe case of denial of that.  If not in doubt, get in doubt fast.

 

 

Mon, 06/11/2012 - 15:17 | 2515687 boogerbently
boogerbently's picture

...we were partners with Iran against Iraq.

Mon, 06/11/2012 - 15:28 | 2515726 Zero Govt
Zero Govt's picture

are you implying Western Govts are rammed with slippery two-faced slimebags?

Good Call

Mon, 06/11/2012 - 22:34 | 2516783 W T Effington
W T Effington's picture

We actually armed Iraq in order to kill Iranians. They kicked our oil companies out of the country and we just couldn't have that. The Constitution governs Iran too, you know. Perhaps our past behavior has induced some of the hatred Iran has toward our glorious government?

Mon, 06/11/2012 - 17:30 | 2516091 Vlad Tepid
Vlad Tepid's picture

Without understanding this it is impossible to understand the future.  As you point out the historical arc has showed China astride the world in technology, wealth, governance, religion, military power, and just about every other metric one can use since the beginning of recorded history.  The last 200 years are a blip that any Chinese will tell you was a result of allowing the non-Chinese barbarian Qing (Manchu) to run the show for too long.

I would say history is quickly reverting to its norm and people had best understand how China has managed and "worked with" client states, tributaries, and "barbarians" in the past.  The term "Middle Kingdom" isn't just flowery rhetoric; it's a description of their national philosophy.

Tue, 06/12/2012 - 00:00 | 2516998 W T Effington
W T Effington's picture

CPL, Lets get real. There is nothing necessarily superior about any particular race. It all comes down to ideas. Certain ideas are superior to others. Liberty being one of them. Free people produce and create. Slaves and the repressed do not. China may become a powerful people again but it will only be because they are free and productive. Power comes from wealth. Wealth comes from productivity. Productivity comes from free people. Free people embrace the ideas of liberty. Therefore, liberty is empowering. Not a peoples long lost domination of others which is what you seem to refer to.

Also, you claim that the one with the longest story wins. Wins what exactly? Does not every peoples history go back to the same place. Every man dies. Your story is not your great grandfathers story, or your fathers story or a Chinese mans story who lived 1000 years ago. Your story begins and ends with you. We either learn from our own experience or if we are wise we learn from the men and women who have walked this earth before us. There is a difference between living in the past (like you seem to be) and learning from the past (which is what I suggest doing). You are the one who seems to be in denial of the reality we are faced with in the year 2012. China, America, Europe. We are all different versions of the same monster. Central Power and Central Planning. If we do not change, we all face the same fate, regardless of race, genealogy or any other superficial categorization.

Mon, 06/11/2012 - 13:17 | 2515283 txsilverbug
txsilverbug's picture

The question really is, what is China NOT hording.

 

US Dollars..

Mon, 06/11/2012 - 13:39 | 2515354 Town Crier
Town Crier's picture

Alcohol.  Most Chinese are allergic to it.  More hours in the day to get things done.

Mon, 06/11/2012 - 13:53 | 2515391 francis_sawyer
Mon, 06/11/2012 - 13:30 | 2515333 Harbanger
Harbanger's picture

 It's more like 1929, except this time it will be a European-American power exchange and transfer to Asia.

Mon, 06/11/2012 - 13:51 | 2515380 greyghost
greyghost's picture

you haven't read the latest from the mighty jim quinn. he says he knows where the equilibrium of supply and demand is exactly. i wonder if he has calulated the chinese hoarding in his theories? hat tip to the monkey...said so much with few words and no graphs or charts!

Mon, 06/11/2012 - 15:01 | 2515620 Bicycle Repairman
Bicycle Repairman's picture

"he says he knows where the equilibrium of supply and demand is exactly."

Only a select few know this.  And this knowledge is used to great effect.  BTW Mr. Quinn isn't one of the select.

Mon, 06/11/2012 - 13:06 | 2515244 CrashisOptimistic
CrashisOptimistic's picture

FYI this might not be hoarding.

China's domestic oil extraction-from-the-ground rate (aka production) is among their most closely guarded state secrets.  Journalists who enter the country and travel to oil well regions have been arrested and jailed as spies.

There has been substantial speculation that China's oil extraction rate is well past peak and declining.

And thus, even if their economy is weakening and reducing their oil consumption, they may have to increase imports -- with it having nothing to do with hoarding.

Mon, 06/11/2012 - 13:56 | 2515310 Bicycle Repairman
Bicycle Repairman's picture

"China's domestic oil extraction-from-the-ground rate (aka production) is among their most closely guarded state secrets."

Only China does this.  All other countries, including the US, have no trouble being completely transparent about their most strategic commodity.  After all, without such disclosure, how could the free market in oil exist?

/sarc

Mon, 06/11/2012 - 13:23 | 2515300 MarkS
MarkS's picture

It's not what they are hoarding, it's why they are hoarding.  And, it's not because they fear a collapse of the $US.

They are hoarding oil because they recieve a large portion of their oil from Iran and that could be an issue if a blockade of Iran happens.  FYI, the US petroleum reserves are at their highest level EVER, which if your conspricay a theorist and you add that to the level of US operational forces in the proximity of Iran it tells you something...or not.

They are hoarding other commodities for 3 reasons. 

First, it allows them to transfer capital out of China - buy AND OVERPAY for a commodity (notice their average price for oil) and have the excess go into your bank account, an inefficient but very real way of avoiding capital oversight/controls.

Second, this upcoming transfer of power is creating a good deal of uncertainty internally.  The arrest of Bo Jilai was important because it pits the conservatives (intelligence and the Army - Bo Jilai) against the reformers (current leadership).  It shouldn't be lost on anybody that:

1.  the arresting forces were not common to his region

2.  that the leadership called on the Army to publicly suport the arrest after it happened

Third, commodities are used as an informal currency inside of China, although not so much as 2 years ago as the government has caught on to it.  Chinese were using a sort of barter system to avoid the tracking of cash internally, but the governement caught on about 18 months ago and put everyone on notice that they had 'noticed'.

 

Mon, 06/11/2012 - 14:32 | 2515543 dbomb12
dbomb12's picture

I think it is allot more simple, the Chinese are hoarding gold oil and other commodities because I am sure they believe as everyone else does that hyperinflation is soon to come, so why not purchase hard good with dollars before it is completely worthless and when it loses reserve currency status they will still have all the hard goods they purchased in exchange for basically worthless toilet paper.

Mon, 06/11/2012 - 16:24 | 2515907 Breaker
Breaker's picture

It'll be funny if big-time deflation suddenly kicks in.

Mon, 06/11/2012 - 20:37 | 2516486 prole
prole's picture

Then we can buy it all back, with more dollars... winning!!

Mon, 06/11/2012 - 21:19 | 2516598 dbomb12
Mon, 06/11/2012 - 12:50 | 2515165 Cognitive Dissonance
Cognitive Dissonance's picture

Black Gold bitches!

Mon, 06/11/2012 - 12:52 | 2515179 carbonmutant
carbonmutant's picture

...Bitchez

Mon, 06/11/2012 - 12:54 | 2515188 Sudden Debt
Sudden Debt's picture

...Biatch!

Mon, 06/11/2012 - 13:15 | 2515271 CPL
CPL's picture

This episode of the Zerohedge was rbought to you by the letter B.

Mon, 06/11/2012 - 13:39 | 2515353 Shazam342
Shazam342's picture

That is so Sesame Street! 

Mon, 06/11/2012 - 13:17 | 2515280 Bananamerican
Bananamerican's picture

Biotechs Britches!

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