Wednesday, May 28, 2014

Putin Says Russia, China Need To Ensure Security Of Their Gold Reserves

Here's some background on the comment about China officially announcing their gold reserves (see article link below).  Previous to 2009, China's central bank officially only had a few hundred tons of gold reserves.  After accelerating their buying programs, they announced they had accumulated 1054 tons in 2009.  This was one of the reasons why gold prices surged even higher into 2011 to an all-time high of $1923/oz.

Since that official announcement, the Chinese have been methodically adding to their reserves (some analysts would describe the buying as furious).  Recent estimates of Chinese gold holdings from observers at Swiss refiners, COMEX and ETF vaults, and Hong Kong and Shanghai exchanges range from 4,000 - 6,000 tons.  Some theorize it is not only western central banks (specifically the Fed and the Bank of England) and their bullion bank proxies suppressing the price of gold (in order to mask the debasement of the USDollar), but the Chinese are also suppressing prices in order to buy physical gold bullion at lower prices.

In essence, the western banks naked short paper gold contracts, artificially driving down spot prices, while Chinese (as well as Indian, Russian, Asian, and Middle Eastern) buyers are snapping up physical gold at discounted prices.  This blowback emptying of vaults will ultimately doom the economies of the bankrupt western world, signifying the largest wealth transfer in history from the western economies to the eastern.

The take away message is if and when the Bank of China officially announces their gold reserves, the tonnage will be so high that markets will react violently and bid up the price of gold again, as it did in 2009.

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