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It is common knowledge that the Chinese Government wants more gold for her reserve (always deny intention or just keep mumb) and China wants her citizens to own more gold (done in high decibels!) Reasons are aplenty but there is one subtle piece I believe is the essense of the game plan, the master stroke,one of the main intentions. That is:- Gold will literally flow into China like streams and rivers via hightened "civil" purchases apparently for general investment purposes and for the production of decorative artifacts. Now under all these enlarged (and confused) commercials, is it not easy to divert some of the gold into the reserve pile w/o having the government to buy them in the open market whereby creating all those unwanted attentions? Sure it can be done! When sufficient gold is in the hands of her citizens, is it not conceivable that at the right time (to annunce the pegging of the Yuan partially with gold is one) the Chinese government can have some or all of those gold by a simple process of signing an edict? I am not sure how labourious it took Roosevelt to take the gold from the American citizens but I am sure it is pretty easy for the Chinese Government to perform a similar act if she chooses to--the citizens's gold holdings form part of the country's reserve. I am all for the venerable Mr John Embry's atatement published in the Mineweb, quote " The Chinese were just out today again with more suggestions that the public buy more and what have you and basically physical gold is moving from the West to the East and when that process is largely finished, then the price is going to go nut...." Pity those bullion banks gold price suppressors. They should know by now time has changed. Remember--Those who have the gold make the rules.
some statistics country gold % of reserve USA 8133.5tonnes 68.7% Germany 3407.6tonnes 64.6% Italy 2451.8tonnes 63.4% France 2435.4tonnes 64.2% Switzer- land 2435.4tonnes 28.8% Nether- land 612.5 tonnes 51.7% Russia 607.6 tonnes 4.7% Japan 765.2 tonnes 2.4% China 1054.0tonnes 1.5% IMF 3005.3tonnes - Sorry UK is not in the top 10 owners of gold
Likewise, one can glence what is the potential appetite of China
Thanks P05! Good to see the convergence of ideas among so many of us - and pundits, too. I wonder about the more sinister aspects of your analysis, Wingfong. It isn't that I'd put anything past the Beijing government (or ours, for that matter). There is, however, a large body of political philosophy in the Chinese lexicon which supports developing a wealthy population. Granted, most of that is ancient. But its interesting to see that Sun Tzu's principles (and admonitions) of warfare are as relevant today as they were 2000 years ago, as are many of the lessons contained in Lao Tse and The Book of Changes. One of Beijing's primary concerns over the last 15 years or so has been to maintain economic growth as a means of keeping power. Tienanmen scared the hell out of the power structure. Of course, one may view the option to confiscate much like the option of suicide: its always one of your choices until you actually choose it. Tends to nullify your other choices, though...
Believe China is being forced into accelerating the purchase of gold because of its holding of more than 1 trillion of its +-2 trillion reserve in US$. It seems they are racing against time to convert at least part of this US$ stock pile into gold before having to come to face with the fast deteriarating or sudden devaluation of the US$. They could have bought all the gold they wanted some 10 years ago at +-US$300 should they have forseen this. Now they have to find ways to minimise some huge potential loss when the US$ does roll over. All said, believe demand for gold thus created is huge and the price of gold should be well supported at the least.
6 comments:
It is common knowledge that the Chinese Government wants more gold for her reserve (always deny intention or just keep mumb) and China wants her citizens to own more gold (done in high decibels!)
Reasons are aplenty but there is one subtle piece I believe is the essense of the game plan, the master stroke,one of the main intentions. That is:-
Gold will literally flow into China like streams and rivers via
hightened "civil" purchases apparently for general investment purposes and for the production of decorative artifacts.
Now under all these enlarged (and confused) commercials, is it not easy to divert some of the gold into the reserve pile w/o having the government to buy them in the open market whereby creating all those unwanted attentions? Sure it can be done!
When sufficient gold is in the hands of her citizens, is it not conceivable that at the right time (to annunce the pegging of the Yuan partially with gold is one) the Chinese government can have some or all of those gold by a simple process of signing an edict? I am not sure how labourious it took Roosevelt to take the gold from the American citizens but I am sure it is pretty easy for the Chinese Government to perform a similar act if she chooses to--the citizens's gold holdings form part of the country's reserve.
I am all for the venerable Mr John Embry's atatement published in the Mineweb, quote " The Chinese were just out today again with more suggestions that the public buy more and what have you and basically physical gold is moving from the West to the East and when that process is largely finished, then the price is going to go nut...."
Pity those bullion banks gold price suppressors. They should know by now time has changed. Remember--Those who have the gold make the rules.
some statistics
country gold % of reserve
USA 8133.5tonnes 68.7%
Germany 3407.6tonnes 64.6%
Italy 2451.8tonnes 63.4%
France 2435.4tonnes 64.2%
Switzer-
land 2435.4tonnes 28.8%
Nether-
land 612.5 tonnes 51.7%
Russia 607.6 tonnes 4.7%
Japan 765.2 tonnes 2.4%
China 1054.0tonnes 1.5%
IMF 3005.3tonnes -
Sorry UK is not in the top 10 owners of gold
Likewise, one can glence what is the potential appetite of China
Thanks P05! Good to see the convergence of ideas among so many of us - and pundits, too.
I wonder about the more sinister aspects of your analysis, Wingfong. It isn't that I'd put anything past the Beijing government (or ours, for that matter). There is, however, a large body of political philosophy in the Chinese lexicon which supports developing a wealthy population. Granted, most of that is ancient. But its interesting to see that Sun Tzu's principles (and admonitions) of warfare are as relevant today as they were 2000 years ago, as are many of the lessons contained in Lao Tse and The Book of Changes.
One of Beijing's primary concerns over the last 15 years or so has been to maintain economic growth as a means of keeping power. Tienanmen scared the hell out of the power structure. Of course, one may view the option to confiscate much like the option of suicide: its always one of your choices until you actually choose it. Tends to nullify your other choices, though...
Believe China is being forced into accelerating the purchase of gold because of its holding of more than 1 trillion of its +-2 trillion reserve in US$. It seems they are racing against time to convert at least part of this US$ stock pile into gold before having to come to face with the fast deteriarating or sudden devaluation of the US$.
They could have bought all the gold they wanted some 10 years ago at +-US$300 should they have forseen this. Now they have to find ways to minimise some huge potential loss when the US$ does roll over.
All said, believe demand for gold thus created is huge and the price of gold should be well supported at the least.
Price action since June1 looks scary. Are we being set up for a take-over @ 60 cents?
Peter
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