China 's gold reserves 1of2 growing by leaps and bounds

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.

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[deltawingforce]

Can u say inflation....its coming, dollar is coming to the end.....everyone is panicking.......

[KingDrudge]

LMFAOOOO, aint that the truth. Remember, that clown Geithner was laughed at by Chinese students.

[rogertayloRRR]

who do these countries guy their gold from? lol

[z0mbie116]

dollar will be down to the ground.. americans will give all their dollars to buy gold.. americans went to many war with the God religion, this what they get..

[polygamous1]

n the IMF owns over 3000 tons of gold 3112 or more if i remember right then take the so called "WORLD" bank own by the same ppl as the fed n imf most of the world's gold is owned by few private bankers but that is Not enough so now u got all them companies advertizing send us u r unwanted/scrap goldsilver n we'll send u Real cash! they want EVERYTHING ppl have m just B4 paper money is dumped they'll consfiscate the rest of gold/silver IN THE INTEREST OF NATIONAL SECURITY they ARE the govenments

[saadabdulaziz]

who owns gold mine any way? what if some one comes up and say they found so and so much mine here or there then what? to be honest every thing is controlled there is no free market, tomorrow they can drop gold price who knows really, who owns all the precious metal mines, do arab control oil price? hell no, they are so chained that they sell oil and get return in dollar and that also kept in us banks, they should be taking gold in return of oil, but it no free market, its all crazy out there

[saadabdulaziz]

@deltawingforce no one can say, that would secret only bangster would know and they would already shifted their capital before they pull down the curtain.

[BatusaiJack]

lingerie bowl. Can't stop thinking of those hot babes getting interviewed by cavuto

[SKATERCOMICS]

go watch my v for victory video! its the winner

[beilever777]

China is not the primary owner of us debt. They hold a fraction. European bankers own the US. China is just the petry dish of the 1 world government. European bankers also hold china's debt. Their will be a gold bubble. You can't eat gold, or paper. You can't take gold to the grave. Trust in God, not man.

[GayWorldOrder]

@searchforknowledge1

Thanks for the advice on buying all the gold I can, mate! Worthless dollars into gold, I like that! how much gold can I buy with 250k? That's my savings, used to be over a $ million before the economy collapse, but my stock investments vanished into thin air overnight back in Sept, 2008. :(

[searchforknowledge1]

@GayWorldOrder go to Creditors in Commerce and start learning. Lots and lots of info but your a little behind for whats coming. You better get started and quick. Hope this helps.