Max Keiser talks to Stacy Herbert about China’s gold reverves and the dollar being dumped
recorded on April 25th 2009
China admits to building up stockpile of gold
http://www.financialpost.com/news-sectors/story.html?id=1530063
China has admitted what many gold bugs have long speculated: it’s been stockpiling gold since 2003.
SHANGHAI/BEIJING – China revealed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes – or a pot worth about US$30.9-billion – and confirming years of speculation it had been buying.
Hu Xiaolian, head of the State Administration of Foreign Exchange, told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.
The confirmation of its surreptitious stockpiling is likely to fuel market talk about Beijing’s ability to buy secretly and its ambitions for spending its nearly US$2-trillion pile of savings. And not just in gold: copper and other metals markets are booming thanks to China’s barely-visible hand.
Speculation has gathered speed over the last year, since the tumbling dollar has threatened to weaken China’s buying power – and give it yet more reason to diversify into gold, oil and metals.
Gold prices jumped on the news of Chinese buying and were up more than 1% on the day at US$912.05 an ounce at 0715 GMT. By a Reuters calculation, China’s holding of gold would be worth around US$30.9-billion at current prices.
That accounts for only about 1.6% of China’s total foreign exchange holdings and is little more than one-tenth of the value of the U.S. gold reserve, the world’s biggest. It also means gold has slipped as a share of China’s total reserves from about 2%, based on end-2003 prices.
Only six countries hold more than 1,000 tonnes, and China is ranked fifth, having leap-frogged Switzerland, Japan and the Netherlands with its announcement.
However, the International Monetary Fund and the SPDR Gold Trust exchange traded fund are even bigger, leaving China with the world’s seventh-biggest pot of gold.
Several gold market participants said they thought China had bought on the international market, helping to absorb hundreds of tonnes sold off by central banks and the International Monetary Fund in recent years.
“China has been buying via government channels from South Africa, Russia and South America,” said Ellison Chu, director of precious metals at Standard Bank in Hong Kong.
But Hu said the increase in China’s stocks was achieved by buying on the domestic market and from domestic producers.
China is the world’s largest gold producer and does not permit exports of gold ingots, only jewellery, leaving plentiful supplies for the domestic market.
China produced 282 tonnes of gold last year, meaning the state bought around one quarter of domestic production, assuming 454 tonnes increase in state purchases were spread out over the six years since China last reported a change in its holdings.
Despite the rumours, buying by the state was partially obscured by soaring demand for gold as an investment, especially after the bursting of the Shanghai stock market bubble last year.
Investment demand in China rose to 68.9 tonnes from 25.6 tonnes in 2007. But that was still less than one third of retail demand in India, where total bullion consumption topped 660 tonnes last year.
Hu said China recently reported the change in its gold holdings to the International Monetary Fund and would include the latest change in central bank reports and balance of payment statistics.
She did not say when China notified the IMF.
Although gold rose after Hu’s comments were published, the price move was not a huge one for the highly liquid market. Prices had jumped by US$13 in the space of an hour on Thursday.
Gold market participants said the news signalled likely further buying by China.
“The comments indicate that China will buy more gold as reserve to improve its foreign reserve portfolio. This is a trend,” said Yao Haiqiao, president of Longgold Asset Management.
Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes.
“It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis,” he said.
“The financial crisis means the U.S. dollar value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage.”
The European Central Bank recommends its member banks hold 15% of their reserves in gold, but among Asian nations the percentage is far smaller, said Albert Cheng, World Gold Council managing director for the far east.
Duration : 0:8:18
[youtube HEC48kL2eNc]
October 29th, 2009 at 3:03 am
Can u say inflation …
Can u say inflation….its coming, dollar is coming to the end…..everyone is panicking…….
October 29th, 2009 at 3:03 am
Be patient and wait …
Be patient and wait for a correction.
October 29th, 2009 at 3:03 am
They’ve got no …
They’ve got no other option (after Peter Shiff)
October 29th, 2009 at 3:03 am
right, but Chinese …
right, but Chinese are doing good thing by pulling the plug on dollar – there will be no more debt to pay off for grandchildren of American tax payers. Well, they think about their citizens first, but unwillingly they do a favour to Americans.
October 29th, 2009 at 3:03 am
LMFAOOOO, aint that …
LMFAOOOO, aint that the truth. Remember, that clown Geithner was laughed at by Chinese students.
October 29th, 2009 at 3:03 am
If you’re rich, buy …
If you’re rich, buy as much gold as you want. If you don’t have much money, silver will serve you very, very well. In fact, there may even be a chance that silver reaches or exceeds the price of gold. Read one of the greatest financial books ever written “Guide to Investing In Gold and Silver.” It has deep relevant content that is explained in simplicity. Read the part about silver. You’ll be glad you did.
October 29th, 2009 at 3:03 am
I actually can’t …
I actually can’t watch main-stream media for more than three minutes, and it’s NOT my attention span….. They’re STILL carrying the Michael Jackson story. They’re STILL going on about ‘recoveries’ and ‘green shoots’…. Yeah green bullets from the gun of fascism… How’d you like it third world….. I mean America + Britain, you’re money us useless, banks own us and companies WILL keep dissappearing. Denial’s a funny thing, most Nazi’s were in denial too ^_^
October 29th, 2009 at 3:03 am
The FED & Treasury …
The FED & Treasury are the purveyors of US T Bonds. But for many years, big banks like JP Morgan & Goldman Sachs have sold T Bonds that they had no authority to sell; which is essentially counterfeiting those bonds: Selling short Bonds that dont even exist
The FCC had all records on criminals like Paulson, Geithner, Ruben, Summers & others engaging in that illegal activity. But all the records of those illegal trades were destroyed when WTC 7 was brought down by thermite on 9/11!
October 29th, 2009 at 3:03 am
You may think that …
You may think that the privately owned Federal Reserve Bank that our US Constitution forbids has money, but you would be wrong: Just like the empty hallows of Fort Knox, the FED has swapped all its treasury paper for all these worthless toxic assets that wiped out the banking system. If we get a Ron Paul styled audit of the FED, you will see it holds no value at all. This is also why Germany Prime Minister last week on the FED: They know it is broke & Germany wants its gold bullion back!
October 29th, 2009 at 3:03 am
I would never trade …
I would never trade anything against anythign else than something stabile such as gold. As China they should only exhange any goods against gold nothing else There is weekly shipment of Gold reservers from Kentucky Fort Knox to Asia and will continue until there is 0 ounce of gold/silver in whole north america.
October 29th, 2009 at 3:03 am
Gold is where to …
Gold is where to buy, I am planning to invest into China, cause they are going to be on top of the economy
October 29th, 2009 at 3:03 am
WTF? Lingerie Bowl …
WTF? Lingerie Bowl on the news? Are you serious??? This is a lot worse than expected. I have not watched mainstream news in at least 8 months, and this is what is occurring. The Daily Show showed another clip of Geraldo Rivera tucking his tie and joining in on this type of “fun.”
The major news programs are really dumbing us Americans down lately.
October 29th, 2009 at 3:03 am
If China lost 2 …
If China lost 2 trillion dollars of us bond/treasuries, they can still take the hit and continue to live. They produce their own products and sell it to their own people (they have way more people than the United States as customers).
Also by losing some money China can become the new super power country in the world. I think its good money wasted.
October 29th, 2009 at 3:03 am
Paul Krugman said …
Paul Krugman said China going off from dollar actually help US economy. See his blog.
China would lose a lot money by buying Gold because US will not release gold. Decrease supply means increase price. China will have to spend a lot and alot of money buying gold.
Why would China want to lose money?
October 29th, 2009 at 3:03 am
Gold is good but …
Gold is good but silver is simply nuts. Not only there is 8 to 10 times less of it above ground but it is used by industry at such levels that we could ran out in a couple of years. You have 190 billion dollars short positions on all precious metals other than gold and taking the price of silver there is approximately only MAX 5 billion dollars of silver current price. Talk about price manipulation. Prediction? Silver will be triple digits in 18 months.
October 29th, 2009 at 3:03 am
please… you think …
please… you think the Chinese listen to you? the chinese gov has some really smart person working there..
anyway, i think the chinese is loading all kind of commodities.. .not only gold…
October 29th, 2009 at 3:03 am
china is not …
china is not betting the future of their economy on the selfish capitalist white man’s worthless paper money
October 29th, 2009 at 3:03 am
i’m buying… hope …
i’m buying… hope you are too!
October 29th, 2009 at 3:03 am
China is buying …
China is buying gold.. and so should you
(and/or silver too)
October 29th, 2009 at 3:03 am
China has cut up …
China has cut up the US credit card.
They have to get out of the dollar so they have something left when US hyperinflation hits.
All that US debt they hold won’t be worth the paper it is printed on.
They are getting ready, so should you.
I like how they put words in other people’s mouths. I haven’t heard anyone say you are crazy or stupid to buy gold. Only these people on this video.
Only fools thought the high real estate prices made sense.
October 29th, 2009 at 3:03 am
1:25
a) ”they …
1:25
a) ”they heard what I said and did what I said”
lol max
October 29th, 2009 at 3:03 am
unfortunately, my …
unfortunately, my neighborhood supermarket doesn’t accept gold when I want to purchase bread….yet.
October 29th, 2009 at 3:03 am
why, you ask? …
why, you ask? because China is set to be the next world power. but I don’t think all thhis is going to last all that much longer though. all this stuff WILL come to an end.
October 29th, 2009 at 3:03 am
lingerie bowl boobs.
lingerie bowl boobs.
October 29th, 2009 at 3:03 am
The dollar is not …
The dollar is not backed by gold anymore. Nixon took the dollar out of the gold standard after France realized that the US was printing more dollars that what they had backed with gold, and the french asked to ship their dollars in gold to their country. Look at glen beck – inconvinient debt