Here's the excerpt of the article from AFR. I'm not a bear nor a bull just thought this is interesting. http://www.afr.com/p/business/companies/data_gap_points_to_gold_stockpile_Vwv4xqR4ROZFodXN4lK7NK Data gap points to gold stockpile in China SIMON RABINOVITCH A 500-tonne gap in China's gold consumption data is fuelling talk the central bank took advantage of weak prices last year to bulk up its -holdings of the precious metal. The last time the Chinese central bank said it increased its gold holdings was nearly five years ago, in early 2009. Officials have since then repeatedly insisted they do not view gold as a useful asset for diversifying the country's $US3.8 trillion ($4.2 trillion) mountain of foreign currency reserves. But the latest official figures show China imported and produced far more gold in 2013 than its citizens bought. Analysts say this chasm suggests the central bank was a buyer in the gold market last year in spite of its protestations to the contrary. ..... . .
This bloke is a genius, he is worth every dollar they pay him. Has he figured out what the Chinese have done with all their domestic production of the past 5 years? Or the surplus of imports over exports in that same time? 5000 tons PLUS! OC
One very important thing I would like to know is whether they buy gold with dollars. Also: how many of their dollar reserves do they use to buy gold. We need more figures. More concrete believable numbers and proof of China's actions regarding gold. :/
TH, I presume they use US currency, and possibly even US Treasury Bond certificates, if the gold seller is silly enough to part with it. Their own currency also of course, and even some trade transactions. They dig up near 400 tons a year and keep it all. The last official figure was a bit over 1000 tons about 5 years ago, and with imports MUST be well over 5000 tons in the kitty. OC
That's what I'd do if I wanted to supplant the USD as the reserve currency. I'd amass gold, say 8000 tons or so - half as much as the Americans say they have (and no-one believes) but enough to be a gold power. I'd also allow and persuade nations like Britain and Russia to trade in my currency. I'd let my currency rise a bit, in a controlled fashion, against the dollar - the US will think they are winning the currency battle, but really they are losing the war. I'd also persuade some oil exporters to price in my currency. Maybe start with Venezuela.* If another, larger oil exporter then moved to my currency as well, I'd announce my gold reserves were backing it at a fixed rate, and that all trade with my economy would be denominated in it from now on. The world's central banks would flick like a switch and the US economic hegemony would be over. Inflation in my country would fall while my currency rose. Exports would suffer but internal consumption and wealth would increase. Moreover, with the exporting of my inflation, I could print money like never before without devaluing or raising prices. My people would be fantastically wealthy while the average American gets pushed into poverty, clutching dollars no-one wants while prices rise as the world sends all the greenbacks home. *China's reached this point already.
