While talk is cheap in the United States when it comes to reviving the gold standard, China is putting its money where its mouth is in amassing physical gold through a number of tactics, whether by buying its own domestic production, taking over foreign mining companies in Australia and elsewhere, or encouraging its citizens to buy their own metal. Ralph Benko of Forbes and Dr. Alex Cowie of Money Morning Australia detail the steps Beijing has been taking in two separate articles:
As Benko notes, quoting Christopher Potter of Northern Border Capital Management:
As Benko notes, quoting Christopher Potter of Northern Border Capital Management:
* China is ... increasing its monetary gold reserves at an alarming rate. Five years ago China surpassed the US in gold production and five years from now it will own more gold than the US Federal government.
* China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.
* China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.
* The Chinese government has recently removed all restrictions on personal ownership of gold; legalized domestic gold exchange traded funds; is currently purchasing 100% of domestic gold mine production; has imported over 750 tons of gold (27% of global output) in the last 12 months; stated publicly its intention to add 1,000 tons per year to its central bank gold reserves; and is buying major stakes in foreign gold mining companies. The scale of this initiative is extraordinary.
Meanwhile, Cowie noted:
In short -- China is playing every card it can to secure supply and increase its gold stash. So, how much have they grown?
That's the thing, we have no idea.
Most countries update their gold holdings every year or so. But China keeps us in the dark. ...
The big question is why is China hell bent on accumulating gold?
Simple -- China has been working steadily to launch its currency, the yuan, as an international currency. To do this, it helps to back its currency with gold.
Meanwhile, Cowie noted:
In short -- China is playing every card it can to secure supply and increase its gold stash. So, how much have they grown?
That's the thing, we have no idea.
Most countries update their gold holdings every year or so. But China keeps us in the dark. ...
The big question is why is China hell bent on accumulating gold?
Simple -- China has been working steadily to launch its currency, the yuan, as an international currency. To do this, it helps to back its currency with gold.
But 1054 tonnes is simply not enough. If the euro and US dollar are any measure, they will need closer to 5,000-10,000 tonnes. So expect a much, much higher gold price if China seriously intends to accumulate as much as that.
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