Wall Street concerned over China's gold hoarding

[Pangu]

Wall Street concerned over China's gold hoarding

• Huang Shu-rong and Staff Reporter
• 2014-06-02
• 09:21 (GMT+8)

A customs officer holds a gold ingot seized at Shahjalal International Airport in Bangladesh. (Photo/Xinhua)

The People's Bank of China, China's central bank, is the world's biggest gold hoarder and the bane of Wall Street traders, reports the Chinese-language financial news website BwChinese, citing a Hong Kong financial analyst.

Leung Hai-ming told the portal that China's central bank took advantage of the US Federal Reserve's quantitative easing program in 2013, when the price of gold fell by 27%. The bank bought in over 1,000 tonnes of gold, representing almost one third of the world's 3,756 tonnes last year.

There is reportedly less than 180,000 tonnes of gold reserves left, and only 20% of that remaining gold is tradable. This means that the People's Bank of China will likely keep hold of the gold, limiting the gold trading volume — a concern for both the US government and Wall Street traders.

Leung said that the US Federal Reserve loans gold to investment banks such as Goldman Sachs, Citibank, JPMorgan Chase, Morgan Stanley and others every year to trade in the market. The amount of gold ranges between 400-500 tonnes and the move acts to artificially suppress gold prices. When the prices are in their favor, these investment banks buy back the gold and return it to the Fed.

But this measure is absolutely useless because China's is hoarding the gold and does not follow the rules, Leung said. When it sees that gold prices are going down, the first thing it does is buy them, and does not sell when prices continue to fall. It seems that Wall Street cannot do anything to counter China on this, according to Leung.

The analyst said that the People's Bank of China is putting pressure on Washington and Wall Street as the US dollar has been linked with gold prices since its rise as the leading global currency. The Fed hopes to manipulate gold prices in its favor, Leung said, but the Chinese central bank is standing in its way.

Wall Street concerned over China's gold hoarding｜Finance｜Business｜WantChinaTimes.com

 

[tranquilium]

Gee, when China was buying up the gold in 2013, these people are saying China are in for a bad investment because gold price is drop and now they are "concerned".

 

[ViXuyen]

Even with the Chinese buying up all the gold; gold price is still dropping. Imagine when the Chinese start to unload all the gold, price is going to drop further.

 

[MightyDragon]

China reserves too many valueless USDs, so trade them for gold is a good idea

 

[cirr]

China absolutely needs to convert more of its 4 trillion USD foreign reserves into physical assets，be they precious metals、lands、oil & gas fields or any other tangible stores of value。

 

[Mao1949]

Even with the Chinese buying up all the gold; gold price is still dropping. Imagine when the Chinese start to unload all the gold, price is going to drop further.

LOL why would we unload our gold? China is buying as much gold as we can as quickly as we can. The lower gold prices go, the better for us.

 

[Pangu]

Even with the Chinese buying up all the gold; gold price is still dropping. Imagine when the Chinese start to unload all the gold, price is going to drop further.

To put things into perspective for you.

 

[Raphael]

But this measure is absolutely useless because China's is hoarding the gold and does not follow the rules, Leung said. When it sees that gold prices are going down, the first thing it does is buy them, and does not sell when prices continue to fall. It seems that Wall Street cannot do anything to counter China on this, according to Leung.

The analyst said that the People's Bank of China is putting pressure on Washington and Wall Street as the US dollar has been linked with gold prices since its rise as the leading global currency. The Fed hopes to manipulate gold prices in its favor, Leung said, but the Chinese central bank is standing in its way.

I wonder what the "rules" for buying gold are? Only buy gold with the permission of the US federal reserve? Only buy gold when it's above a certain price in USD? Only buy gold from wall street traders?

These jokers think they can invent rules out of thin air to keep their monopoly on price manipulation. The reality is China wouldn't feel such an urge to buy gold if they didn't keep depreciating the value of their green paper, in violation of their obligations to bondholders.

 

[Mao1949]

Gold has been manipulated like crazy. They do this through the COMEX futures market where each contract is not backed by physical gold bullion. Big banks do it as the Fed loans their gold to the big banks to suppress the price of gold if there is a price spike by dumping the gold into the market. China is now establishing an international physical gold exchange so that each contract will be backed by physical gold and not paper gold.

 

[UKBengali]

China absolutely needs to convert more of its 4 trillion USD foreign reserves into physical assets，be they precious metals、lands、oil & gas fields or any other tangible stores of value。

You are doing that.

Thank you Chinese friends for agreeing to fund Sonadia deep sea port
In BD. Good for BD and good for China.

 

[conworldus]

The promise of the USD hinges on the US energy independence. I am deeply skeptical of whether the US will achieve this. I would say gold still looks good in the long run.