China. Gold.

JulieW · Mar 16, 2017

Solving the Secret Behind the Chinese Gold Market Expert estimates total holdings at 19,500 metric tons

The world is full of golden rules. There is one for every fieldethics, communication, fashion. But there is only one that counts: the golden rule of money, "Whoever has the gold makes the rules."

China, it seems, wants to make the rules in the international monetary system, which is why it has been acquiring vast amounts of gold through both private and official channels.

Because of the obscure nature of the Chinese gold market and the reluctance of Chinese officials to show their hand, nobody has been able to accurately calculate how much gold the Chinese have acquired since 2000, when they began amassing it.

Enter Koos Jansen, an analyst with Singapore bullion dealer BullionStar. He has studied the Chinese gold market for years and recently came up with an estimate of total Chinese gold holdings: 19,500 metric tons, or 21,495 U.S. tons, at the end of January 2017.

"They have promoted gold ownership as a store of value since at least 2002, but more so when they introduced the 'storing gold with the people' concept [a campaign encouraging private citizens to buy gold] in 2004," said Jansen.

Private Hoard
According to Jansen's estimates, total private holdings, including those of individuals and firms, are 15,500 metric tons. The official reserves of the People's Bank of China (PBOC) are around 4,000 metric tons.

This would make Chinese the second biggest holders of gold after India, where citizens are estimated to hold 20,000 metric tons of gold in jewelry and other forms. Private sector holdings for the United States are unknown, but the Treasury still holds 8,134 tons in official reserves.

But where did China get all this gold, when in the year 2000 it only had about 4,000 tons in total?

The first piece of the puzzle is domestic mining.

"In the 1970s, when China needed foreign exchange, that's when they started their mining industry. They were supposed to start exploration, and the people were incentivized to mine gold. That's why there are so many gold mines in China." He pegs the number at around 600.

Those 600 mines produced 490 tons of gold in 2015, making China the biggest producer, ahead of Australia, which produced 300 tons.

Selling Into a Black Hole
The next piece of the puzzle is imports from other countries. According to Jansen's estimates, China imported about 1,300 tons of gold in 2016, mostly through Hong Kong but also directly from Switzerland and the United Kingdom.

Here, Jansen points out a peculiarity regarding Asian buying: "Asian demand is strong when the price goes down. Western demand is strong when the price goes up. In April 2013, the gold price collapsed and a lot of gold was exported from the West to China, mostly from the U.K."

When the gold gets into China, it is then sold through the Shanghai Gold Exchange (SGE), which also handles scrap supply and domestic mining.

Curiously, Jansen points out, none of this supply is going to the central bank but rather to consumers and companies.

"In the domestic market, there are laws and incentives to push supplies through the SGE. Scrap, domestic production, imports, all go through SGE at first. The withdrawals from the exchange are roughly equal to total private gold demand."

Private demand comes from individuals who want to diversify their assets, institutional investors like pension funds, and jewelry companies for later resale, among others.

"Companies and individuals buy gold for the same reason: Get out of the renminbi, diversify, protection, etc.," he said.

As for the central bank, Jansen says that their purchases don't show up in official import statistics and are kept as a close secret.

"The Chinese army even has a special division, I call it the gold army. It was also launched in the 1970s for exploration, at first. This gold army can still be active. They can pick it up directly in the U.K.," he said. The central bank also uses commercial banks who buy in Switzerland or South Africa and secretly ship the gold to China.

For example, the total gold holdings of the London Bullion Market Association dropped by 2,750 tons from 2011 to 2015, but net exports were only 1,000 tons. Thus, 1,750 tons are unaccounted for and most likely ended up in official Chinese reserves.

According to Jansen's contacts at Chinese banks, official holdings are closer to 4,000 tons rather than the published figure of 1,842 tons.

What does China need that gold for? "They buy official gold to internationalize the renminbi. If there are enough gold reserves backing it, they can make it a credible world reserve currency." Whoever has the gold makes the rules.

That's also why China doesn't allow even one ounce of gold and silver to leave its shores once it enters. As Jansen put it, "the West has been selling gold into a black hole."

http://www.theepochtimes.com/n3/2232547-solving-the-secret-behind-the-chinese-gold-market-2/
Click to expand...

Jim Rickards would agree.

Stoic Phoenix · Mar 16, 2017

^ Read last sentence first and stopped....Someone more knowledgeable can hopefully answer this but aren't panda silver and gold coins made in mainland China? If so then closing statement isn't factual.

GoldenEye · Mar 16, 2017

Stoic Phoenix said:

^ Read last sentence first and stopped....Someone more knowledgeable can hopefully answer this but aren't panda silver and gold coins made in mainland China? If so then closing statement isn't factual.
Click to expand...

But are they real PMs leaving China or are they fake??

Ipv6Ready · Mar 16, 2017

JulieW said:

That's also why China doesn't allow even one ounce of gold and silver to leave its shores once it enters. As Jansen put it, "the West has been selling gold into a black hole."

http://www.theepochtimes.com/n3/2232547-solving-the-secret-behind-the-chinese-gold-market-2/
Click to expand...

Jim Rickards would agree.
Click to expand...

12th China International Gold Jewellery & Gem Fair Shanghai 2016 (Presume the 13th is on this June)
http://www.conference.city/conference.php?e_id=104553

Below are the 15 countries that exported the highest dollar value worth of jewelry during 2015:
China: US$18.6 billion (19.1% of total jewelry exports) inc HK
Switzerland: $11.1 billion (11.3%)
India: $10 billion (10.2%)
United States: $9.7 billion (9.9%)
Hong Kong: $6.7 billion (6.9%)
Italy: $6.3 billion (6.4%)
United Kingdom: $6.2 billion (6.4%)
France: $4.5 billion (4.6%)
Turkey: $3.8 billion (3.8%)
Thailand: $3.6 billion (3.7%)
Singapore: $2.8 billion (2.9%)
United Arab Emirates: $2.7 billion (2.7%)
Malaysia: $1.7 billion (1.7%)
Germany: $1.7 billion (1.7%)
Japan: $1.6 billion (1.7%)

JulieW · Mar 16, 2017

Perhaps he meant one ounce of bullion.

billybob888 · Mar 16, 2017

Perhaps hes just full of it

Ipv6Ready · Mar 16, 2017

Maybe we should get rid off Gold police unit (for real lol, I thought it was joke until I searched china gold army lol) and set up an gold army like china.

https://www.police.wa.gov.au/Crime/Gold-stealing/Gold-Stealing-Detection-Unit

Gold Stealing Detection Unit
The GSDU provides a dedicated specialist investigative service to the gold industry in Western Australia. The unit investigates offences related to the theft of gold and gold mining equipment throughout WA and other states, when necessary.
With frequent patrols, the GSDU also provides the only regular policing service to many isolated gold mining operations.

As a recognised authority on both gold theft and the security of gold, the GSDU provides advice and training to national and international law enforcement agencies and gold producers.

The functions of the GSDU are:

Security Services - providing clearances, mine site visitations, education, inspections, security advice, training and security reviews aimed at the prevention of gold theft; and
Investigations - response and investigation aimed at the detection, apprehension and prosecution of offenders involved in gold theft.
Report suspicious activity
Anyone can report any suspicious activity or information to Crime Stoppers on 1800.... or call the GSDU on (08) 9021...
Click to expand...

I blanked out the real numbers, so they don't get any hoax from here

Paul · Apr 16, 2017

Ipv6Ready said: ↑

12th China International Gold Jewellery & Gem Fair Shanghai 2016 (Presume the 13th is on this June)
http://www.conference.city/conference.php?e_id=104553

Below are the 15 countries that exported the highest dollar value worth of jewelry during 2015:
China: US$18.6 billion (19.1% of total jewelry exports) inc HK
Switzerland: $11.1 billion (11.3%)
India: $10 billion (10.2%)
United States: $9.7 billion (9.9%)
Hong Kong: $6.7 billion (6.9%)
Italy: $6.3 billion (6.4%)
United Kingdom: $6.2 billion (6.4%)
France: $4.5 billion (4.6%)
Turkey: $3.8 billion (3.8%)
Thailand: $3.6 billion (3.7%)
Singapore: $2.8 billion (2.9%)
United Arab Emirates: $2.7 billion (2.7%)
Malaysia: $1.7 billion (1.7%)
Germany: $1.7 billion (1.7%)
Japan: $1.6 billion (1.7%)
Click to expand...

Koos Jansen has apparently never looked at the SGE website, which is available in English, so ALL OF YOU can look at it.

SGE is an international exchange located in a free trade zone. Anybody can buy or sell.

The $18.6 billion noted above was probably some 400 tons of gold.

I live in Thailand, and the premium to buy jewelry as opposed to bullion is only about 5%.

James · Apr 18, 2017

Paul said: ↑

Koos Jansen has apparently never looked at the SGE website, which is available in English, so ALL OF YOU can look at it.

SGE is an international exchange located in a free trade zone. Anybody can buy or sell.

The $18.6 billion noted above was probably some 400 tons of gold.

I live in Thailand, and the premium to buy jewelry as opposed to bullion is only about 5%.
Click to expand...

SGE calls itself a physical delivery market. But there are stacks of regulations to navigate if you want to physically take bullion out of their system. I recommend a look at their delivery rules........... http://www.en.sge.com.cn/eng_rules_Delivery
On that webpage, I've already had a look at the download called "Detailed rules for physical delivery of the Shanghai Gold Exchange"
In it is the gem :
" Article 8 Neither a corporate customer without the general taxpayer status nor an
individual is allowed to participate in the Physical Delivery of silver
ingots or bars. "
......It's not so easy being an outsider. There's plenty more in the above download that anyone can look at.

Paul · Apr 18, 2017

The way I read your quote of Article 8, it simply says that anybody wanting to conduct business in silver ingots or bars must do so through a local agent who must be a (tax) registered company.

I DO NOT think it means that individuals can't buy and sell, just that the interface to the SGE must be local.

I am pretty sure there is similar wording in the regulations of the stock and futures markets here in Thailand as well.

I suspect it is not much different than the COMEX.

That is why there are only 215 silver and 331 gold traders shown on this week's CFTC report.

Those numbers do not include "non-reportables", and I have no idea how many they might be, but probably many times the number of larger traders, I am sure.

However, most countries have restrictions on foreigners doing business.

Log in or Sign up

China. Gold.

JulieW Well-Known Member Silver Stacker

Stoic Phoenix Well-Known Member Silver Stacker

GoldenEye Well-Known Member Silver Stacker

Ipv6Ready Well-Known Member Silver Stacker

JulieW Well-Known Member Silver Stacker

billybob888 Well-Known Member Silver Stacker

Ipv6Ready Well-Known Member Silver Stacker

Paul Member

James Member

Paul Member

Share This Page

Log in or Sign up

China. Gold.

JulieW Well-Known Member Silver Stacker

Stoic Phoenix Well-Known Member Silver Stacker

GoldenEye Well-Known Member Silver Stacker

Ipv6Ready Well-Known Member Silver Stacker

JulieW Well-Known Member Silver Stacker

billybob888 Well-Known Member Silver Stacker

Ipv6Ready Well-Known Member Silver Stacker

Paul Member

James Member

Paul Member

Share This Page

Useful Searches