This analysis originally appeared at the USAGold website.
Why China thinks gold is the buy of the century
by Michael J. KosaresLet’s start with some big, but digestible numbers:$3,950,000,000,000 = China’s total foreign exchange reserves$1,250,000,000,000 = Value of the world’s 31,866 metric tonnes gold reserve at $1220/troy ounce_________________________________________________________________________________________________________$1,280,000,000,000. = China’s holdings of U.S. Treasuries in its foreign exchange reserves$ 319,000,000,000. = Value of U.S. 8133 metric tonnes gold reserve at $1220/troy ounce_________________________________________________________________________________________________________Now let’s delve into what those numbers might mean to the average gold owner…When it comes to the gold market, China is the dragon in the room. With its nearly $4 trillion in foreign exchange reserves and potential purchasing power, that presence is formidable.How formidable? Consider this:– China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves.– It could purchase the total global gold reserve (31,866 metric tonnes) with 32% of its foreign exchange reserves.– It could purchase all the gold stored by Exchange Traded Funds (+/- 1750 metric tonnes) with less than 2% of its foreign exchange reserves.– At $4900 per troy ounce, the value of U.S. gold reserves would match China’s U.S. Treasury holdings of roughly $1.28 trillion.– At $4700 per troy ounce, the value of the world’s gold reserves would match China’s total foreign exchange reserves of roughly $4 trillion.– To put it another way, China could pay double the current price for the world’s total gold reserve and still have nearly $1.5 trillion in foreign exchange reserves.– China sits atop the list of the world’s foreign exchange holdings.The United States ranks thirteenth at $133 billion. For the United States to ascend to the top of the rankings, it would need to revalue its $319 billion gold reserve to almost $4 trillion – or raise the value to just under $15,300 per troy ounce…There is quite a bit more. You may read the entirety of Michael’s very interesting analysis here.
I think someone could make a valid point that this analysis presumes that China is all that interested in buying gold.
And guess what? They are! They are buying the hell out of it. And they are encouraging their people to do so as well.
We just don’t know yet how much they are buying, and why. But I am sure we will find out, eventually. In the meanwhile, no one outside the blogosphere seems to be interested in talking about it, or even admits to knowing it.
Central Banks turned net buyers of gold around 2006 after a long period as leasers and net sellers.
The only countries that have not visibly gotten with the program are the core members of the Anglo-American banking cartel. They have been conducting a fairly obvious, and often clumsy, campaign to discourage interest gold and silver ownership amongst their own people with varying degrees of success.
There is much talk of precious metal market manipulation in New York and London. The leverage in their opaque markets is substantial. The Fed has stated that it could not return Germany’s relatively modest amount of gold being held in custody as requested for seven years. Apparently it has prior commitments.
This is one of the biggest developments in international monetary relationships in almost forty years, and the whole thing is going on virtually unremarked, unaudited, and unexplained. It seems like an absolutely lame-brained, misbegotten, monumental government policy error, to try and rig the gold price against a mountain of paper.
Or I sometimes wonder if this isn’t one of the biggest, Goldfinger-sized, insider trades in history. You don’t need to contaminate the Western gold reserves. All you need to do is to stealthily hypothecate them to take them out of play. Poof. The cupboard is virtually bare.
It is hard to know anything about the markets in the US because they are so often given to hidden trades and misdirecting statistics. And this is just the way the powers that be like it.
What could possibly go wrong?
Related: China and the Goldfinger Syndrome
China is toast!
[img]https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQfOvz6RszUz6oA2ObcN2PYOmoMzdAKS7kdSD5dmYoKOHrZAzk4[/img]
RE
Why don’t you go jerk off a mountain lion with barbed wire in a phone booth, you batter-batter swallowing cock gobbler.
China is THE new world power!
Ahhhhh …. the good old days (above)
Personally, I salute Gold and all precious metal buyers as astute students of economy and investment. Precious metals are all that’s left to provide true, unmitigated, un-manipulated value. EVERYTHING else is gamed six ways from Sunday.
@Westcoaster
un-manipulated?
“Gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation.”
~ Alan Greenspan – October 2014
“Gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation.”
~ Alan Greenspan – October 2014
Wait… What? Today is October 1, 2014. Did he say this today?
He actually said it two days ago in an article he wrote for Foreign Affairs magazine.
Silver dropped below $17 earlier.
I’m smiling.
Wish I could afford gold, but alas, I work with what I’ve got and towards better.
If you’ve been waiting to buy some PMs, it is looking like now is the time. My best guess is that the prices are being artificially deflated to keep the USD/EU value up, and allow the true money to hoard, and who the hell knows but I’m grateful as I recently saw (here?) an article regarding PMs and their estimated no longer able to be mined dates. These dates are LOTS closer than you think.
Every ounce held is a piece of future demand. Maybe I’m wrong but as our systems become more complex and begin to implode into themselves, owning a little something that has both medicinal value AND a store of wealth seems more than prudent.
Good luck to the Swiss, as the Fed has refused a 100% audit of their golden holdings, I wouldn’t hold my breath – nor bank on – that return going quickly. Maybe that is why the price is down, the Fed is rushing around trying to buy up stock to “return” to those countries that are starting to show their hedging against our future destruction.
USA! USA! USA!
“Gold is the money of kings; silver of gentlemen; barter of peasants; debt is the money of slaves”
TE,
Here is a place you can order ‘small’ amounts of gold:
http://www.valcambi.com/products-and-metals/combibarTM/au/20-x-1-g/20-x-1-g-gold-combibarTM/
Then I will try to post Peter Schiff`s vid re the product:
http://www.24hgold.com/english/contributor.aspx?article=4318186642G10020&contributor=Peter+Schiff
If vid won`t come up, I`ll try the Youtube:
Thanks @eugend!