China's Gold Reserves Almost Doubled 43 comments
April 24, 2009
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Word comes from across the Pacific this morning that China has been increasing their gold reserves and finally decided to let the world know about it. Here's the list of the world's top holders of gold, updated to reflect China's new total and the SPDR Gold ETF holdings.
Hu Xiaolian, head of the State Administration of Foreign Exchange, announced the hefty increase which was attributed to domestic purchases and scrap supplies. China overtook South Africa last year as the word's leading producer of gold and, apparently, a good portion of that output is finding its way into central bank vaults, though, as a percent of total reserves, it's still just a pittance.
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my hunch is that gold is in a hold your breath period as government meddling is in a wait and see period. the meddling is a set up for currency disaster. our advantage is a delayed reaction because our fiat money is perceived as better than other fiat monies. i will hold out awhile longer and hope for that pullback in the $750 range to add. right now i will keep adding silver in small amounts in case the pullback doesn't come.
china takes the 50 to 100 yr. view so i believe they will keep upping their reserve as quietly as possible. that will be for all non-landfill assets. when countries bolt for the door to dump fiat dollars china will have unloaded much of what they hold. they seem to be investing in africa and the petrobras deal was good strategy.
i think china was lying about the 6.1% growth and assume they are downplaying their acquisitions of real assets.
i also question the govt. numbers on our gold reserves.
That would equate to 8% of their foreign currency holdings :
let's not forget the bigger picture, China has being pushing currency swaps in Asia & further afield :
China has agreed a 70 billion Renminbi ($8 billion) currency swap with Argentina that will allow it to receive Renminbi instead of U.S. dollars for its exports to the Latin American country.
Beijing has signed 650 billion Renminbi ($95 billion) worth of deals since December with Malaysia, South Korea, Hong Kong, Belarus, Indonesia. This, and now Argentina, in an attempt to unblock trade financing that has been severely curtailed by the crisis.
signs are that this will continue in the forseeable future.
Link to Guardian article from above comment, apologies, more haste, less speed : www.guardian.co.uk/bus...
Read this article for details.
2ndlook.wordpress.com/.../
Gold holdings per se don't have anything to do with the strength of a country's currency. Right now it's a historical accident that the U.S. has a strong currency and the world's largest (supposedly) government held gold supply.
The macro trend for the last few odd years has been for the dollar to fall, I'm assuming based on our chronic trade deficits. The only reason it hasn't fallen faster against the renminbi is because the Chinese haven't allowed their currency to float.
The Russians recently spent a huge amount of their foreign currency reserves to defend the ruble, so far it's not working out that well for them. But their gold holdings are up.
When Gordon Brown was in charge of the UK's finances he foolishly sold a bunch of their gold at $250 an ounce. He seemed to think that in this day and age gold was irrelevant. This is, among many other reasons, probably why Labour is going to lose the next elections and the Tories will come back into power in Britain. Probably the other gross economic mismanagement has more to do with that, though.
If the price of gold goes down it lowers the value of the gold holdings. But you have to look at the different currencies involved. Gold has been unable to breach the $1000/oz mark in the US dollar, but in many other currencies it set new highs, because those currencies were all going down against the dollar. I haven't heard anyone in the UK complaining lately about the value of the gold they own.
On Apr 25 08:18 AM vishal0soni wrote:
> Yes Jasper M, thats what i meant. Countries might sell the gold to
> generate more revenue.
>
> History Buff:
> If currency is stronger due to gold's backup, it means the more
> the gold, higher the currency value.
> But this is not reflected in present scenario. Countries with strongest
> currencies are not even in the list of gold stock holders.
>
> Also, what if the price of gold also lowers down in international
> market. Will that not lower down the market value of these gold stocks.
>
>
And now i guess i need to learn the basics about what decides and keeps the strength of any currency.
And why is comparison always made against USD. Why not GBP or something else?
On Apr 25 03:41 PM History Buff 24/7 wrote:
> vishal0soni,
>
> Gold holdings per se don't have anything to do with the strength
> of a country's currency. Right now it's a historical accident that
> the U.S. has a strong currency and the world's largest (supposedly)
> government held gold supply.
>
> The macro trend for the last few odd years has been for the dollar
> to fall, I'm assuming based on our chronic trade deficits. The only
> reason it hasn't fallen faster against the renminbi is because the
> Chinese haven't allowed their currency to float.
>
> The Russians recently spent a huge amount of their foreign currency
> reserves to defend the ruble, so far it's not working out that well
> for them. But their gold holdings are up.
>
> When Gordon Brown was in charge of the UK's finances he foolishly
> sold a bunch of their gold at $250 an ounce. He seemed to think
> that in this day and age gold was irrelevant. This is, among many
> other reasons, probably why Labour is going to lose the next elections
> and the Tories will come back into power in Britain. Probably the
> other gross economic mismanagement has more to do with that, though.
>
>
> If the price of gold goes down it lowers the value of the gold holdings.
> But you have to look at the different currencies involved. Gold
> has been unable to breach the $1000/oz mark in the US dollar, but
> in many other currencies it set new highs, because those currencies
> were all going down against the dollar. I haven't heard anyone in
> the UK complaining lately about the value of the gold they own.<br/>
In the coming currency wars between nations those countries holding the most gold will find their currencies accepted with a greater degree of faith.
In effect, these countries will never sell their gold. But, they WILL sell their paper.
Gold is trying to see the same thing we are, will we recover, and if so when and what will be the effect of our increasing the money supply.
Raising interest rates will simply stifle the economy, so they will not do that, deflation will not help as people need more money and can't get that with falling prices....
So, when the continuing economic problems worsen in the near term, more will buy gold, and it will increase in price, as a real safe haven [etc etc blah blah] for the reasons for gold rising, then it will fall when things get good again.
I am 63 and hope to see things get good again, in the meantime, I don't own stocks, but am buying more gold, and trading up.
I am selling my gold and buying platinum as the new ETF comes out, and they need to fund it. With Platinum prices less than half of what it was, it is cheap in my eyes.
I will sell gold and silver and buy platinum when I can get it, and I can get it for $ 44 over spot, now u go hunt for it too.
have a nice day
Capt. Brian issued another storm warning for you
But it still has lot of potential for providing a strong base for world economy.
On Apr 26 02:15 PM Freya wrote:
> Uppai: So India has more gold than the top ten countries combined
> because private Hands in India hold around 28,000 Tons.
>
> They managed to accomplish this feat by buying $3 Billion in gold
> every year for the past 100 years?
>
> Did someone go door to door verifying the amounts? Don't bother pointing
> to your link. I was there. The Article is as lacking in details as
> you are.
>
>
>
>
>
The argument is getting stronger to hold at least a bit of gold.
On Apr 24 06:13 PM History Buff 24/7 wrote:
> vishal0soni,
>
> In the olden days countries held on to gold to make sure their currency
> was strong (i.e., backed by something). Even today, selling gold
> is not likely to make their currency any stronger, especially considering
> the currency is backed by NOTHING.
Or in the hands of people all over the world for that matter.
They managed to accomplish this feat by buying $3 Billion in gold every year for the past 100 years?
Did someone go door to door verifying the amounts? Don't bother pointing to your link. I was there. The Article is as lacking in details as you are.
Sars will look like peanuts. The International Airline Industry poof. Forget about exports, will imports vanish as well given the risk of taking the virus home.
If this comes to fruition, will oil supertankers come to our shores? Food containerships, any kind of containerships?
It will be Isolationism at its finest, the USA will learn just how dependent it is on the rest of the world for its goods. It will be worse than the Great Depression.
Initially, the big movers should be the Biotechs, then the energy plays both big and small, I can go on but you know the drill.
all internally generated, no open market purchases.
Last year, it was the Saudi and Iranian Gold purchases (which were used to facilitate the Dubai Gold and Commodity Exchange's development), this year its China.
Will a GM/Chrysler Bankruptcy be perceived as Inflationary? I don't think so.