• 1 day The Federal Reserve and Money...Aspects which are not widely known
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Coincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas
  • 5 hours European Parliament Members, Cristian Terhes et al, push back against Totalitarian Digital ID and Carbon Tyranny in Europe.
  • 3 days Demonising fossil fuels has caused major grid problem in Australia
  • 7 days "And this is perhaps the most dangerous kind of government there can be."
  • 2 days "...too many politicians believe things that aren’t true." says Robert Rapier
  • 3 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 3 days Welcome to Technocracy - The New World Energy Order... "1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage"
  • 4 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 329 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 7 days ESG Topic - "German Police Raid Deutsche Bank, DWS Over Allegations Of Greenwashing" - ZeroHedge Bloomberg and others
Could This Be One Of The Most Exciting Gold Discoveries Of 2021?

Could This Be One Of The Most Exciting Gold Discoveries Of 2021?

An up-and-coming gold exploration company…

Gold And Silver Prices Slip Despite Soaring Inflation

Gold And Silver Prices Slip Despite Soaring Inflation

Gold, silver, platinum, and palladium…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

China's Insatiable Appetite for Gold

Gold bugs and naysayers alike take note. When the world's second largest and fastest growing economy liberalizes gold ownership by individuals, who happened to be the planet's most fastidious savers at a 17% rate, you better pay attention.

Among other reforms, the Middle Kingdom is repealing the death penalty for the illegal importation of the yellow metal. The potential demand this will unleash boggles the mind. China historically has been a hard currency culture, and only started using paper banknotes when they were forced upon them as a way to repay debts by foreign colonial powers in the late 19th century.

But the Chinese desire to own gold and silver never went away. In 2009, China imported 73 metric tonnes of the barbaric relic worth $2.6 billion to bring its official holdings to 1,054 metric tonnes. That leaves it far behind the US, which at 8,133 tonnes is the world's largest gold owner. China's gold holdings amount to only $37 billion, or only 1.5% of its $2.45 trillion foreign exchange reserves.

To get China's gold investment up to American levels on a GDP basis, it needs to buy 25 million ounces worth $31 billion. That amounts to 34% of the 2009 global annual production of $110 billion. Being astute traders, the Mandarins at the People's Bank of China are loathe to chase prices, so don't expect them to make up the gap in one shot. Instead, expect a quiet diversion of new current account surpluses out of the greenback and into gold.

You can also expect other emerging market central banks to make the same move. If non G7 central banks from the current 20% average of reserves to the 35% weighting now owned by the G7, it will require 1.3 billion ounces of new purchases, or 20% of the total world supply. I can hear the "BUY" tickets being written already.

The Chinese aren't going to provide the next spike in gold prices, but they are building a floor higher than anyone expects. That's why the last sell off took us down only 8% to $1,158 before a rebound.

Courtesy: Mad Hedge Fund Trader


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Anonymous on August 31 2010 said:
    This and the Chinese locking up the rare earth elements are why the 21st century is going to belong to them. We're doing all most everything wrong and they're doing all most everything right.
  • Anonymous on September 01 2010 said:
    I agree about rare earth elements, but why can't the US with est. 15% of world holdings exploit that resource? Scary that they restrict their exports of REE.
  • Anonymous on September 01 2010 said:
    Well said. The worlds biggest savers are buying gold and silver. How long before they stop buying US debt via the treasury auctions? Wake up America - the 40 year experiment in fiat currency is coming to an end.
  • Anonymous on September 02 2010 said:
    Time to start learning Mandarin..
  • Anonymous on September 08 2010 said:
    Why learn Mandarin? Even if they become the world's leading power, they have been studying English for years. Any contact with them will be in English.
  • Anonymous on September 09 2010 said:
    Why learn Mandarin? So you can understand the Chinese whispers going on behind your back when they're not speaking to you in perfect English...!

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News