China and Gold

Discussion in 'Gold' started by JulieW, Nov 20, 2018.

  1. JulieW

    JulieW Well-Known Member Silver Stacker

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    https://www.zerohedge.com/news/2018-11-19/does-china-have-enough-gold-move-toward-hard-currency

    These shifting relationships changed China’s gold policy from one where gold acted as a sort of general insurance policy against monetary unknowns, to its accumulation as a strategic asset.

    Bullion was freely available, partly because Western central banks were selling it in a falling market. The notorious sale of the bulk of Britain’s gold by Gordon Brown at the bottom of the market was the public face of Western central banks’ general disaffection with gold. China was on the other side of the deal. Between 1983 and 2002, mine supply added 42,460 tonnes to above-ground stocks, when the West were net sellers.

    The evidence of China’s all-out gold policy is plain to see. She invested heavily in gold mining and is now the largest national miner of gold by far. Chinese government refiners were also importing gold and silver doré to process and keep, and they set a new four-nines standard for one kilo bars. Today, China has a tightening grip on the entire global bullion market.

    A decision was taken in 2002 by China to allow the public to buy gold, and the benefits of ownership were widely promoted by state media. We can be certain this decision was taken only after the State had accumulated sufficient bullion for its supposed needs.

    China’s public has accumulated approximately 15,000 tonnes to date, net of scrap recycling, based on deliveries out of the Shanghai Gold Exchange’s vaults. Given the public is still banned from owning foreign currency, gold ownership should continue to be popular as an alternative store of value to the yuan, and currently between 150-200 tonnes are being delivered from SGE vaults every month.

    Other than declared reserves, it is not known how much gold the state owns. But assessing capital flows from 1983 and allowing for the availability of physical bullion through mining supply and the impact of the 1980-2002 bear market, the PBOC could have accumulated as much as 15,000-20,000 tonnes before the public were permitted to buy gold. If so, it would represent approximately 10% of those capital flows at contemporary gold prices.

    The truth is unknown, but we can be sure gold has become a strategic asset for China and its people. China must have always had an expectation that in the long-term gold will become money again, presumably as backing for the yuan. Otherwise, why go to such lengths to monopolize the global bullion market?

    But there is a problem. As time goes on and a newer, western-educated generation of leaders emerges, will they still fully recognize the value of gold beyond being simply a strategic asset, and will they recognize the real reasons behind the West’s economic failures, given they have successfully embraced its economic and monetary policies?

    Were the Chinese to take a turn toward hard-money policies, it is hard to see how the US could match a sound-money plan from China.
     
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  2. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    China discloses how much gold it has on a regularly.
    Maybe not to zerohedge likeing but no one in Chinese governemnt likely to even heard of them lol.

    As far as Chinese government is concerned they updating IMF and World Bank every five to eight years as required is good enough.

    Also there is nothing strategic about China having hidden gold from the official IMF reserves, that would be self defeating in having foreign reserve.

    China is a net seller of gold to a tune of about 400 tons a year
     
  3. JulieW

    JulieW Well-Known Member Silver Stacker

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    Reference available? I thought the Chinese holdings were opaque.
     
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  4. Oddjob

    Oddjob Well-Known Member Silver Stacker

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  5. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    Which country production and holding of gold in illegal mine, private jewellery ownership and private bullion isn’t opaque?

    But the point is Chinese Government holdings aren’t opaque, Chinese government state what they have when they need to update imf and world bank for foreign reserves records.

    Just because Chinese government don’t report to gold council or zero hedge schedule it does not mean they hiding it for some sinister reasons.

    Plus consider that the reason gorenments hold gold is to tell everyone, owning gold in secret is not strategic.

    Also people like gold council don’t really care about reserve holdings, because reserve is minuscule compared to what is owned by the citizen
     
    Last edited: Nov 20, 2018
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  6. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    A lot of hype going on with gold and China story. One just have to look at the "premium" for gold lunars and pandas to see how the demand is doing.
     
  7. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    Panda premium is just smart business from Chinese mint.

    Since Chinese government doesn’t own the mines they buy gold at spot and are making good margin selling pandas but also making sure the dealers and the end buyers can all profit. Hence the heavy demand.

    Compare that to Royal Mint or Perth Mint who seems to treat dealers and collectors with contempt with re-releasing closed mintages
     
  8. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Not seeing a significant resale market for pandas, although PM coins seems to be more popular in the international aftermarket, never mind the appreciation value.

    Does PM and RM remint coins that are already end of series? As in reminting Lunar 1 series coins? I know they can remint any of the lunar 2 series any time now and next year.
     
  9. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    THe issue with Perth Mint is that they release the coin first, than they respond to market (if any) by amending their policy
     
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  10. Ag bullet

    Ag bullet Well-Known Member

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    if there isn't a Chinese millionaire that has changed his name to 'Cha Ching' i don't understand the point of money.
     
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  11. Ipv6Ready

    Ipv6Ready Well-Known Member Silver Stacker

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    I read someone where china has more billionaires than any other country, if the ratio holds they probably have more millionaires.

    It would be interesting to see a graph of top 10% of Chinese population.

    ie the likely minimum wage of someone in the top 20% in a major city could be more than USA.
     
  12. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    In terms of proportion of population, Singapore, which has a 75% ethnic Chinese population (4.5m people) has the most millionaires per capita for any country if you consider that the majority of Singapore properties are fully paid up and the savings rate is 40%, even higher than China.

    Yet there is not enough people interested in precious metals to even sustain a gold forum or a coin resale market. Security is very good, there are cctv every 50m in any built up area, house breaking is almost unheard of so it’s safe to store your pm at home even without a safe. I’ve given this a thought and the main reason is because unlike cars and property you can’t show off your gold to anyone.
     
    Last edited: Nov 21, 2018
  13. alor

    alor Well-Known Member Silver Stacker

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    cctv are being upgraded again with bigger and better ones to always be watching you
     
  14. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Actually, 50m is already a conversative estimate. Around my home, there's one like every 20-40 metres. If they use an AI facial recognition system, it's actually possible to track a person the moment he steps out of his home and wherever he goes. Once GPS ERP is implemented, you are tracked even on the road.
     
  15. alor

    alor Well-Known Member Silver Stacker

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    HP is a tracker, each month Google gives a report as how many hours being spent from point to points etc
    my office has cctv, i go out there cctv besides the block, there are hundred before i sit on the train, the lift has cctv, my neighbor has cctv, i used to turn mine on as well
    they created a server room with air-con and in around blocks of flats etc, i was thinking of making use of that space to mine bit coins :)
     
  16. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Do you mean such as changing from declaring the final mintage when the next coin in the series is released to declaring final mintage only at the end of the series? How about Kooks, will they remint prior year Kooks? Such as 1999 Kook?
     

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