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Folks are blaming the drop in gold to reports that China did not buy...

cohodkcohodk Posts: 18,553 ✭✭✭✭✭
...as much as anticipated. Why would this cause a drop in gold price?
Excuses are tools of the ignorant

Knowledge is the enemy of fear

Comments

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>...as much as anticipated. Why would this cause a drop in gold price? >>



    The vast majority (if not ALL) analysts had been suggesting their next report would show anywhere from 2200-5500 tonnes. A report of 1658 tonnes didn't cut it.....an under-performance of analysts expectations. Russia ended up buying more gold from 2009-2015 than China did....at least based on public declarations. I suspect China bought much more. But, it's not in their best interest to claim that until they have all they want at the best possible prices. When they reported in 2009 they added over 400 tonnes to reserves it helped to goose the gold market.....ultimately costing them money if they wanted to buy more. Trading appreciated USTreasuries/USDollars for depreciated gold makes sense for the Chinese. Holding $60 BILL in gold reserves against $3.8 TRILL in overall reserves is a pittance (1.6%)....placing them in the bottom 10% of all nations. Iceland, Bangladesh, and Peru have a higher % of gold to overall currency reserves.

    Before this release, I can't recall one analyst who anticipated a number lower than what was reported. During the 2009-2015 period the Chinese imported/mined 6,000-7,000 tonnes of gold. It seems illogical that the PBOC only purchased 604 tonnes. It's probably more important how much gold went into China than just into bank reserves.

    From derryb's thread earlier today:

    My question- since when did anyone start believing official reports from the Chinese government?

    Seriously. The Chinese have a vested interest in understating their gold holdings.

    They know that doing so will push the price of gold LOWER, which is exactly what they want.

    China is sitting on trillions of dollars in reserves right now, a portion of which they’re rapidly trying to rotate OUT of US dollars.

    So it’s clearly beneficial to the Chinese government if they can sell dollars while they’re strong and buy gold while it’s cheap.

    And if they can push gold to become cheaper, even better for them.



    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    Gold is caught up in the deflationary hurricane's affect on commodities.

    No one but China is sure of what gold China has been buying. We only know what China wants us to know. The very recent delay in admitting the yuan into the IMF SDR basket is likely to result in repercussions. I would not be surprised to see China make sudden effort to drive up the gold price in retaliation. A weak gold price has been an asset to the US's economic policy and economic direction.

    Most forget that there is an unkown reason why China took possession of the US's largest vault which is coincidentally located across the street from the NY FED.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • jmski52jmski52 Posts: 22,306 ✭✭✭✭✭
    Most forget that there is an unkown reason why China took possession of the US's largest vault which is coincidentally located across the street from the NY FED.

    Makes collusion that much easier and more convenient, when the time comes.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • rawteam1rawteam1 Posts: 2,472 ✭✭✭


    << <i>Gold is caught up in the deflationary hurricane's affect on commodities.

    No one but China is sure of what gold China has been buying. We only know what China wants us to know. The very recent delay in admitting the yuan into the IMF SDR basket is likely to result in repercussions. I would not be surprised to see China make sudden effort to drive up the gold price in retaliation. A weak gold price has been an asset to the US's economic policy and economic direction.

    Most forget that there is an unkown reason why China took possession of the US's largest vault which is coincidentally located across the street from the NY FED. >>


    ???? We know what they are buying, real estate, you just posted that...
    keceph `anah
  • derrybderryb Posts: 36,118 ✭✭✭✭✭


    << <i>

    << <i>Gold is caught up in the deflationary hurricane's affect on commodities.

    No one but China is sure of what gold China has been buying. We only know what China wants us to know. The very recent delay in admitting the yuan into the IMF SDR basket is likely to result in repercussions. I would not be surprised to see China make sudden effort to drive up the gold price in retaliation. A weak gold price has been an asset to the US's economic policy and economic direction.

    Most forget that there is an unkown reason why China took possession of the US's largest vault which is coincidentally located across the street from the NY FED. >>


    ???? We know what they are buying, real estate, you just posted that... >>


    The fact remains that we do not know how much gold China has been buying.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>Gold is caught up in the deflationary hurricane's affect on commodities.

    No one but China is sure of what gold China has been buying. We only know what China wants us to know. The very recent delay in admitting the yuan into the IMF SDR basket is likely to result in repercussions. I would not be surprised to see China make sudden effort to drive up the gold price in retaliation. A weak gold price has been an asset to the US's economic policy and economic direction.

    Most forget that there is an unknown reason why China took possession of the US's largest vault which is coincidentally located across the street from the NY FED. >>



    Considering the British Pound and the Japanese Yen are in the SDR basket, it would make sense that China should be. China's economy is >90% of the combined 19 nations in the Eurozone.

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • TwoSides2aCoinTwoSides2aCoin Posts: 43,796 ✭✭✭✭✭
    I didn't really want to say this, but it's Bush's fault image … or was it Israel Switt's ? image
  • cohodkcohodk Posts: 18,553 ✭✭✭✭✭
    Thanks for the responses, but I still don't know why this would would cause a drop in gold.

    In fact, and I'm sure no one would be surprised by thisimage, but I would have thought it would have increased gold prices. And this ties into my comment about silver demand in another thread.
    If China didn't buy as much, then that should have meant that that gold will still need to be bought, thus at the very least supporting prices. So has the drop really had nothing to do with Chinese demand? Or, perhaps as roadrunner alludes, is China manipulating the price lower through thir gold exchange? Or is it something else?
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    China is currently and for a while now has been benefiting from low gold prices as they increase their stockpile in record numbers. Is there an arrangement with others to assist with a low gold price? some think so.

    If in fact China has reduced their soverign gold purchases (Only China knows) then it was more likely because they realized that having it as a larger percentage of their central bank reserves did not influence the decision to include the juan in the IMF SDR basket as they assumed it would.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • rawteam1rawteam1 Posts: 2,472 ✭✭✭
    When history is looked back upon, it will show china sold a crapload of gold...
    keceph `anah
  • streeterstreeter Posts: 4,312 ✭✭✭✭✭


    << <i>When history is looked back upon, it will show china sold a crapload of gold... >>



    Bingo.




    Have a nice day
  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    If what I read is correct..China is propping up their stock market to the tune of over 11 million x the average persons yearly income--
    Per day.

    Think about it. If this hiccup really is their 1929 then in about five months they will have spent their 2015 GDP to support their market. Takes a lot of disposal of their liquid assets to do that.

    You can bet that what they sell into the market is not an easy decision. Sell gold? Or sell UST?

    If they sell UST you can be sure of reprocussions from DC.

    I think China has made some terrific miscalculations. The music has stopped. Chairs are scarce.
    Have a nice day
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>When history is looked back upon, it will show china sold a crapload of gold... >>



    Not likely. Russia is in even worse economic condition than China as has sanctions applied. And those guys are reporting gold purchases nearly every month. +73 tonnes last month as I recall. If Russia isn't selling, I don't see China selling in secret. Again, why would they? $60 BILL in gold is barely one ante in a poker game where they have $3.8 TRILL in currency reserves, much of it in US dollar denominated assets. There would be zero reason to sell with such a tiny amount....only a reason to buy more. If they sold all $60 BILL is that really going to support their economy in any meaningful way? It would buy about 2-1/2 days of their annual GDP. That would similar to J6P "canceling" his home and car insurance policies for 2 days to "save money."

    The much more likely scenario is that in the next 6 years, we're going to find out China's gold reserves are in the 2500-5500 tonne range....or greater. The nation mines over 430 tonnes of gold per year and none of it leaves their boundaries. Russia mines over 260 tonnes/year.

    With articles like this - it surely was a disappointment to report 1,658 tonnes.

    Russia adds 173 tonnes in 2014. Buys another 25 tonnes last month.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    China is trying to get a seat at the "table of influence" beside many large (but smaller) economies that have a much greater percentage of their reserves in the form of gold. China is playing catch up with its gold holdings and is vigorously trying to level the playing field in gold holdings. If gold holding by a central bank were not important, central banks would not hold so much of it. Central banks are hedging their bets (insuring) on their fiat holdings with gold. This in itself is proof that gold is currency insurance.



    << <i>When history is looked back upon, it will show china sold a crapload of gold... >>


    Your views on gold and its role in economic matters indicate that you should be more concerned with the present.

    History will not contradict recent years of China stockpiling gold. History is much more likely to show they stockpiled a lot more than they were willing to tell the rest of the world about.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • cohodkcohodk Posts: 18,553 ✭✭✭✭✭
    I don't see where China has sold any gold. But it seems the market is saying China isn't in a rush to buy either. If so, then the price would be moving higher in response/anticipation.

    Market take is that a potential big buyer is on the sidelines.

    I've written here for the last several years that China will need to spend it's reserves to keep its people happy and working.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    China is continuing to spend its paper currency reserves and add gold. They are now reporting gold reserves each month. While they showed a decline of 5% from June to July, that was in US dollars. With gold having dropped 6.5% in price, that actually represented an increase in gold of +24 tonnes. Paper for gold. China will continue to buy on their own schedule. And we can only wonder at how accurate their reported inventory is....no different than how accurate the US gold inventory is. I'd bet than neither is as reported.

    China's reserves

    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • VanHalenVanHalen Posts: 3,789 ✭✭✭✭✭
    Not to change the subject but after yesterday's 1.9% devaluation CNNi just announced another 1.6% devaluation today?! Holy Chit Batman! The Big Red Machine is about to chit a brick.
  • jmski52jmski52 Posts: 22,306 ✭✭✭✭✭
    China will continue to buy on their own schedule. And we can only wonder at how accurate their reported inventory is....no different than how accurate the US gold inventory is. I'd bet than neither is as reported.

    There's two types of demand coming from China - government and private. We saw reports of Chinese consumers in a rush to buy gold a year or two ago, but not so much lately. I wonder if the private demand is still there. On the government side, who the heck knows what the China.gov is doing?

    We know they're doing side deals with just about everyone else in the world in bilateral agreements to get around SWIFT and American control. We know that. We also know that their economy is submarining at the moment. Hence the devaluation. What does that do for gold?

    Hmmmm.....+$10.00 this morning. Like I said, who the heck knows?

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    China mines gold (450 tonnes per year). And all of that stays in China. China also heavily imports gold, over 2,000 tonnes total in 2012-2013, and 813 tonnes in 2014. A decreasing amount. Even with a decrease again in 2015 it's still a considerable amount with most of it staying home. Imports are only gauged on what comes through Hong Kong. There are also imports via Shanghai and Beijing that are not reported. HK is the "proxy" for gauging Chinese imports. While total demand may not be growing as fast as it was in previous years, you're still looking at +1,000 tonnes per year of mining + imports + govt ending up/staying in China. China is always buying. The govt is trying to make sure the people buy considerable gold (see charts below).

    China gold holdings - public and govt
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • cohodkcohodk Posts: 18,553 ✭✭✭✭✭
    If all the gold that China mines stays in China then how is it possible to Americans to buy gold pandas?
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • BaleyBaley Posts: 22,658 ✭✭✭✭✭
    Imagine if future people perceived a reduced desire to have shiny disks in lock boxes... and instead preferred increased ownership of useful property.

    Liberty: Parent of Science & Industry

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>If all the gold that China mines stays in China then how is it possible to Americans to buy gold pandas? >>



    How many gold pandas do they buy? 1% of production? Heck, it's tough enough to get Americans to buy their own AGE's, never mind Panda's, Maples, Coronas, Philharmonics, etc. image

    How many Americans buy gold beyond wedding rings and a few pieces of overpriced jewelry? 1 MILLION? How many Chinese buy gold? 100 MILL? 500 MILL?

    And for every Panda that escapes to J6P...there's probably more AGE's and US 90% classic coin gold that probably make it to China.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>Imagine if future people perceived a reduced desire to have shiny disks in lock boxes... and instead preferred increased ownership of useful property. >>



    Yes. Like digitized cloud-based "shares" of Facebook, Amazon, Apple, etc. Shares that are in street name....not yours.

    Those shiny disks have been desired for 3,000-5,000 yrs+. I believe the owners have always considered it useful property. They've fought wars over those disks....and still do. image
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • derrybderryb Posts: 36,118 ✭✭✭✭✭
    Hmm. . . for the long haul, shiny disks or funny money? a no-brainer. Shiny disks always outlast funny money. Money always gets funny.

    The decline from democracy to tyranny is both a natural and inevitable one.

  • BaleyBaley Posts: 22,658 ✭✭✭✭✭
    I was referring to real estate

    Liberty: Parent of Science & Industry

  • cohodkcohodk Posts: 18,553 ✭✭✭✭✭
    Actually wars are fought over land, women and religion.

    More 1%ers have been created thru the acquisition of equities and land than gold.

    Great question Baley.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭
    Oh, I didn't know this PM forum was only about benefiting the top 1%ers. If the top 1%ers benefit....it must be good for the other 99% too.............well, then carry on. image

    We went into Iraq, Libya, Greece (surgically), etc. to get the gold....not take any land. What happened to the gold of Kuwait, Saudi Arabia, UAE, Oman, etc.? The gold comes first in today's world....oil rights second. And Greece will eventually cough some gold up. Who's up next? I hear there's a lot of gold in Spain, Italy, and France. If you're gonna fight over land, make sure you can do something it. Fighting over rugged mountainous terrain, deserts, etc. is not all that intelligent (Afghanistan). But, when they have some gold to take, well alrighty then.
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
  • BaleyBaley Posts: 22,658 ✭✭✭✭✭


    << <i>Oh, I didn't know this PM forum was only about benefiting the top 1%ers. If the top 1%ers benefit....it must be good for the other 99% too.............well, then carry on. image

    We went into Iraq, Libya, Greece (surgically), etc. to get the gold....not take any land. The gold comes first in today's world....oil rights second. And Greece will eventually cough some gold up. Who's up next? I hear there's a lot of gold in Spain, Italy, and France. If you're gonna fight over land, make sure you can do something it. Fighting over rugged mountainous terrain, deserts, etc. is not all that intelligent (Afghanistan). But, when they have some gold to take, well alrighty then. >>



    you're raving. suggest having one of the half dozen drinks for the year. image

    Liberty: Parent of Science & Industry

  • BaleyBaley Posts: 22,658 ✭✭✭✭✭
    anyway, yes, gold, land, "creeds", babes, plant and equipment, all worth fighting for...

    Or slowly building a rational position in each, rather than clinging to a single one and living on a hope and a prayer that it "wins in the end"

    Liberty: Parent of Science & Industry

  • jmski52jmski52 Posts: 22,306 ✭✭✭✭✭
    I was referring to real estate

    Taxed in perpetuity.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • cohodkcohodk Posts: 18,553 ✭✭✭✭✭


    << <i>Oh, I didn't know this PM forum was only about benefiting the top 1%ers. If the top 1%ers benefit....it must be good for the other 99% too.............well, then carry on. image

    We went into Iraq, Libya, Greece (surgically), etc. to get the gold....not take any land. The gold comes first in today's world....oil rights second. And Greece will eventually cough some gold up. Who's up next? I hear there's a lot of gold in Spain, Italy, and France. If you're gonna fight over land, make sure you can do something it. Fighting over rugged mountainous terrain, deserts, etc. is not all that intelligent (Afghanistan). But, when they have some gold to take, well alrighty then. >>



    I think you should get that air conditioning. Your brain being fried. Lol

    You, especially you, roadrunner have the ability to never worry about money, or taxes, or social blight. Go for it.
    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • streeterstreeter Posts: 4,312 ✭✭✭✭✭
    You're trying too hard roadrunner.


    Have a nice day
  • roadrunnerroadrunner Posts: 28,303 ✭✭✭✭✭


    << <i>I was referring to real estate

    Taxed in perpetuity. >>



    At potentially unlimited tax rates. You own property at the "pleasure of your govt" or municipality. If they suspect you have drugs or other contraband on your property....then it becomes their property, not yours. You have to fight in court at your own expense to try and get it back. "Suspicion of doing something" is now the rule of the land. Real estate (in general) had its nice 52 year run. It still has to complete the 26 year run to the bottom....and it's only 8 years into the consolidation. Maybe it moves sideways during most of that time. But don't expect a repeat of 1955-2007 until a LOT of time has passed. Some locations will fare much better than others.

    I always try harder. But sometimes the fiat bugs just make it too damn easy. And back to Panda's again. China's exports are in such decline, it might be hard to find someone who actually bought a gold Panda outside China....lol. I will admit a forum member just claimed to have a bought a monster box of silver panda's. So there's one. And I forget to mention that Afghanistan does have one valuable natural resource worth fighting over...heroin. Argentina really "enjoying" this Yuan rout as they have 1/4 of their currency reserves in Yuan. They'd have been better off with that 1/4 of their reserves in gold. Even the Chinese people knew that. image
    Barbarous Relic No More, LSCC -GoldSeek--shadow stats--SafeHaven--321gold
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