China Sets Up Largest Gold Fund

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XI'AN, May 23 (Xinhua) -- A gold sector fund involving countries along the ancient Silk Road has been set up in northwest China's Xi'an City during an ongoing forum on investment and trade this weekend.

The fund, led by Shanghai Gold Exchange (SGE), is expected to raise an estimated 100 billion yuan (16.1 billion U.S. Dollars) in three phases.

China is the world's largest gold producer, and also a major importer and consumer of gold. Among the 65 countries along the routes of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, there are numerous Asian countries identified as important reserve bases and consumers of gold.

About 60 countries have invested in the fund, which will in turn facilitate gold purchase for the central banks of member states to increase their holdings of the precious metal, according to the SGE.

"China does not have a big say in gold pricing because it accounts for a small share of international gold trade," said Tang Xisheng of the Industrial Fund Management Co. "Therefore, the Chinese government seeks to increase the influence of RMB in gold pricing by opening the domestic gold market to international investors."
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One time I read that Chinese (State?) are buying up all the Yellow Metal of the world hinting that the price will explode.
Another time I read that China (State?) doesn't have a big say due to small share of international trade.
And everytime I read about gold "consumption", alike it's licked up like a lolly, instead of being stocked for later sales.
Well heh!
 
I know for a fact that nobody has good public figures for what China actually produces domestically, which is going to be the biggest factor in their actual total reserves.

I'd be interested in more details on this fund though. If it's 16 billion dollars of new gold buying for the fund it could be big, if it's 16 billion of mostly existing reserves transferred into this fund to back international money transfers and for credit or gold purchases/transfers between members inside the fund then less interesting.

A giant gold fund like this is good news whatever though.
 
Or it's just 16 billion dollars to "water" 16 million existing ounces in speculators hands.
Abit like how companies on the stock market can add and sell extra shares.
"60 countries". Can I assume governments / States of those countries? Then it's tax money that is given to gold miners. I'm sure they will appreciate all that tax money.
And anyway, in which degree does gold mining matter to the price? Over the last 5 years, the price doubled tripled with 1/3 again gone so far.
This is what mining and recycling did:
Year / Mining / Recycling (tonnes)
1997 2527 631
1998 2574 1108
1999 2602 620
2000 2618 619
2001 2645 749
2002 2618 872
2003 2621 985
2004 2493 878
2005 2548 897
2006 2486 1126
2007 2476 956
2008 2409 1217
2009 2584 1672
2010 2659 1653
2011 2839 1611.9
2012 2864.1 1590.8
2013 3060.3 1254.6
2014 3135.0 1175.9
I don't see much correlation between mining/recycling trend and price. Rather the opposite, they go more against eachother instead.
And that's no wonder, what is a total production of 4000 tonnes on an existing stockpile that is 45 times bigger, and thus has a price impact potential equally bigger?
And that's why I don't understand the focus some lay on mining. They even ignore recycling, while in 2011 and 2012 it was over half what was mined and before and after still over 1/3.
Gold mining, a "big thing", well, apparently it isn't for the price.
Yet, it's exactly that price that "people like us stackers" bother about.
There is a whole lotta Rosie less reason to bother about gold mining lol. :D
 
Pirocco said:
One time I read that Chinese (State?) are buying up all the Yellow Metal of the world hinting that the price will explode.
Another time I read that China (State?) doesn't have a big say due to small share of international trade.
And everytime I read about gold "consumption", alike it's licked up like a lolly, instead of being stocked for later sales.
Well heh!
Click to expand...

You have missed the nuance of the situation. If China is the biggest producer of gold and keeps it to itself, it does not trade. Secondly, when it buys gold from other countries, it does not go on to resell it but keeps it internally, so again is not a trader.
 
sammysilver said:
Pirocco said:
One time I read that Chinese (State?) are buying up all the Yellow Metal of the world hinting that the price will explode.
Another time I read that China (State?) doesn't have a big say due to small share of international trade.
And everytime I read about gold "consumption", alike it's licked up like a lolly, instead of being stocked for later sales.
Well heh!
Click to expand...

You have missed the nuance of the situation. If China is the biggest producer of gold and keeps it to itself, it does not trade. Secondly, when it buys gold from other countries, it does not go on to resell it but keeps it internally, so again is not a trader.
Click to expand...


Yes it does. It exports masses of the worlds jewellery

China is the worlds no 1 jewellery exporter (most of it classed as PM based)

http://www.worldstopexports.com/jewelry-exports-country/3291

29.9% of Chinas total exports is jewellery. Import raw material. Export bling.


let alone all the plating on connectors etc. and the internal consumption is not the state it's bling or the ladies mostly with some small private stackers. The quantity of private demand and exported jewellery actually adds up quite nicely with imports. Some debate this - but it would be clinically insane of China to stack unnecessary gold about 2.3% of reserves....or introduce a PM Yuan etc.
 
phrenzy said:
I know for a fact that nobody has good public figures for what China actually produces domestically, which is going to be the biggest factor in their actual total reserves.

I'd be interested in more details on this fund though. If it's 16 billion dollars of new gold buying for the fund it could be big, if it's 16 billion of mostly existing reserves transferred into this fund to back international money transfers and for credit or gold purchases/transfers between members inside the fund then less interesting.

A giant gold fund like this is good news whatever though.
Click to expand...

China 2015 gold output likely 450 tons: ministry
http://www.marketwatch.com/story/china-2015-gold-output-likely-450-tons-ministry-2012-11-26-34855517

"BEIJING--China aims to have domestic gold production reach 450 metric tons by the end of 2015, a rise of around 25% from 2011, the Ministry of Industry and Information Technology said Monday.

The ministry forecast rising domestic demand for gold and a "huge amount of room" for the industry's development due to gold's safe-haven and wealth-preserving properties, it said.
"

Producing internally is good for trade balance and facilitates the Chinese jewellery industry which accounts for nearly 30% of Chinas total exports.
 
The real story is Chinas domestic demand from the population buying bling and non state stacking is forecast to rise by 200 tons. I expect a hard crash in China though what way that drives demand is anyones guess.
 
Oldsoul said:
sammysilver said:
Pirocco said:
One time I read that Chinese (State?) are buying up all the Yellow Metal of the world hinting that the price will explode.
Another time I read that China (State?) doesn't have a big say due to small share of international trade.
And everytime I read about gold "consumption", alike it's licked up like a lolly, instead of being stocked for later sales.
Well heh!
Click to expand...

You have missed the nuance of the situation. If China is the biggest producer of gold and keeps it to itself, it does not trade. Secondly, when it buys gold from other countries, it does not go on to resell it but keeps it internally, so again is not a trader.
Click to expand...


Yes it does. It exports masses of the worlds jewellery

China is the worlds no 1 jewellery exporter (most of it classed as PM based)

http://www.worldstopexports.com/jewelry-exports-country/3291

29.9% of Chinas total exports is jewellery. Import raw material. Export bling.


let alone all the plating on connectors etc. and the internal consumption is not the state it's bling or the ladies mostly with some small private stackers. The quantity of private demand and exported jewellery actually adds up quite nicely with imports. Some debate this - but it would be clinically insane of China to stack unnecessary gold about 2.3% of reserves....or introduce a PM Yuan etc.
Click to expand...

I think the inference that China does not have a big say is that it does not dump tonnes at a time on the world a la the large bullion banks.
 
"China does not have a big say in gold pricing because it accounts for a small share of international gold trade"

Reckon that's because at this stage China is happy with the price of the gold and keep acquiring the physical and let the paper market be.
 
sammysilver said:
Pirocco said:
One time I read that Chinese (State?) are buying up all the Yellow Metal of the world hinting that the price will explode.
Another time I read that China (State?) doesn't have a big say due to small share of international trade.
And everytime I read about gold "consumption", alike it's licked up like a lolly, instead of being stocked for later sales.
Well heh!
Click to expand...

You have missed the nuance of the situation. If China is the biggest producer of gold and keeps it to itself, it does not trade. Secondly, when it buys gold from other countries, it does not go on to resell it but keeps it internally, so again is not a trader.
Click to expand...
I'm not sure about that "nuance", but let's pick a margin scenario to make clear the contradiction that I see between both statements: imagine a country that doesn't internationally trade at all, a completely "internal" market, how could it then affect any price in the outside? I can't see much "nuance" (interpretation room?) here, it's just a logical contradiction. It's claimed that China doesn't have a big say in the gold price due to a small share of international gold trading, but how could China demand then make the gold price rise?
 
sammysilver said:
I think the inference that China does not have a big say is that it does not dump tonnes at a time on the world a la the large bullion banks.
Click to expand...
That is a possible interpretation. If "international trading" would be defined as trading between large institutions / governments, then we're talking about a part of its trading on the gold market, not its whole. And that wording"big say" is a hint to power, control. And actually, that is what is described at the end of the opening post:
"Therefore, the Chinese government seeks to increase the influence of RMB in gold pricing by opening the domestic gold market to international investors."
This "gold sector" fund, is then a cooperation between China government and 65 other governments, to control the gold price.
This change seen on the timeline, China government that increases its level of cooperation in worlds gold price control.
 
This is an article from a year ago, announcing this:
http://www.forbes.com/sites/kitcone...et-with-international-shanghai-gold-exchange/
And another from september 2014:
http://www.gold.org/news-and-events...hai-gold-exchange-announce-future-cooperation
And closer to the original source, PBOC (Peoples Bank of China) Governor Zhou Xiaochuan, a claim from 2009:
http://www.cfr.org/china/zhou-xiaochuans-statement-reforming-international-monetary-system/p18916
... which didn't exactly turn out that way, rather the opposite, China State piled up US Treasuries (read: dollars).
and this particular subject, also september 2014:
http://www.en.sge.com.cn/news-announcement/news/520475.shtml
After the launch of the International Board, the Shanghai Exchange will be well served by taking lessons from the most current international development and expertise, fully utilizing the advantages afforded by the Shanghai Free Trade Zone, attaining the highest standards and requirements that a world's leading gold exchange should aspire to, and providing investors with the best, most efficient trading, clearing, custody, transshipment and delivery services possible. Shanghai Gold Exchange should take proactive measures to meet market demands, develop new and innovative products, further increase both the depth and breadth of the gold market, and help our gold market gain greater influence in the world. It should also implement actionable measures for risk mitigation and control, dedicate itself to the wellbeing of the trading market, and do its utmost to prevent systemic risks.
Click to expand...
It all reads just like I described earlier: control the gold price. Just check the last line: "do its utmost to prevent systemic risks". The only ones that threat their system are... speculators. People with fiatcurrency bank savings, that try to use gold to avoid the theft along it, finding the very same there as counterparty.
 
phrenzy said:
I know for a fact that nobody has good public figures for what China actually produces domestically, which is going to be the biggest factor in their actual total reserves.

I'd be interested in more details on this fund though. If it's 16 billion dollars of new gold buying for the fund it could be big, if it's 16 billion of mostly existing reserves transferred into this fund to back international money transfers and for credit or gold purchases/transfers between members inside the fund then less interesting.

A giant gold fund like this is good news whatever though.
Click to expand...

The Chinese publish them actually. from memory it is something like 450 t. To lazy to find a reference right now
 
Oldsoul said:
phrenzy said:
I know for a fact that nobody has good public figures for what China actually produces domestically, which is going to be the biggest factor in their actual total reserves.

I'd be interested in more details on this fund though. If it's 16 billion dollars of new gold buying for the fund it could be big, if it's 16 billion of mostly existing reserves transferred into this fund to back international money transfers and for credit or gold purchases/transfers between members inside the fund then less interesting.

A giant gold fund like this is good news whatever though.
Click to expand...

The Chinese publish them actually. from memory it is something like 450 t. To lazy to find a reference right now
Click to expand...
They publish some numbers, but do you trust the numbers published?
 
SilverPete said:
Oldsoul said:
phrenzy said:
I know for a fact that nobody has good public figures for what China actually produces domestically, which is going to be the biggest factor in their actual total reserves.

I'd be interested in more details on this fund though. If it's 16 billion dollars of new gold buying for the fund it could be big, if it's 16 billion of mostly existing reserves transferred into this fund to back international money transfers and for credit or gold purchases/transfers between members inside the fund then less interesting.

A giant gold fund like this is good news whatever though.
Click to expand...

The Chinese publish them actually. from memory it is something like 450 t. To lazy to find a reference right now
Click to expand...
They publish some numbers, but do you trust the numbers published?
Click to expand...

Yes. Probably overstated a touch but that is the norm for Chinas economic figures, especially gdp.

"China Gold Association announced China's gold production more than 450 tons in 2014. China was the World's largest gold producer in 8 consecutive years. "

http://www.huixgp.com/en/news/industry_news/1246
 
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