How Much China Is Really Buying “On the Sly”

David Marsh, a columnist at MarketWatch, thinks “China probably has a lot more gold than it admits.”

I concur. What’s more, as the gold China buys from domestic miners is paid for in yuan, these purchases are easier to leave out of official reserve numbers, thereby accumulating quietly.

By some estimates, China’s actual gold hoard tops an astounding 10,000 metric tons.

One expert, Simon Hunt of Simon Hunt Strategic Services, has suggested a figure as high as 30,000 metric tons:

“China has much more gold than it is allowing the world to see. As Alasdair Macleod, probably the world’s number one analyst of the gold market, wrote that between 1983 and 2002 China probably accumulated 25,000 tons of gold. Thus, its current gold holdings are probably north of 30,000 tons in contrast to the USA which has either sold or leased most of its gold.”

Clearly, that’s a huge number, and if ever China were to confirm something even close to that level, it would certainly shock gold to a massively higher price.

Whether or not China has already accumulated such huge reserves, all the signs point towards a nation that’s aggressively growing its gold stash.

And to do so covertly makes perfect sense: Their buying puts less upward pressure on the price, allowing the Chinese to accumulate even more on the cheap.

Remember, China is only slightly behind India as the world’s largest gold consumer, but it’s indisputably the world’s largest gold producer.

Its mining output is double what it was just a decade ago, and that production stays in-country to help satisfy domestic demand.

Like India, China has a deep, ancient cultural affinity for gold, and it knows only too well that “other” Golden Rule: Who has the gold makes the rules.

With that in mind, the idea that China actually holds a lot more gold than it’s reporting makes much more sense.

At the same time, China is increasingly asserting its position on the world stage – its move to make the yuan a global reserve currency is only the latest step.

So for China to be laying in this kind of massive supply can only mean somethingbig is in the works…

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Why China Needs So Much Yellow Metal

According to Song Xin, President of the China Gold Association (CGA), sufficiently high gold reserves are needed to buttress the yuan.

At a September seminar on gold in Beijing, Song told delegates:

“If the (yuan) renminbi wants to achieve international status, it must have popular acceptance and a stable value. To this end… it is very important to have enough gold as the foundation and raising the ‘gold content’ of the renminbi. Therefore, to China, the meaning and mission of gold is to support the renminbi to become an internationally accepted currency and make China an economic powerhouse… That’s why, in order for gold to fulfill its destined mission, we must raise our gold holdings a great deal, and do so with a solid plan. Step one should take us to the 4,000 (metric) tons mark, more than Germany and become number two in the world, next, we should increase step by step towards 8,500 (metric) tons, more than the U.S.”

Song’s predecessor, Sun Zhaoxue, recommended China increase official reserves and encouraged citizens to accrue gold. Some estimates peg private Chinese gold ownership at 12,000 metric tons.

Still, I don’t know that China necessarily wants to back its currency with gold, even if only at a token level. It makes more sense to buttress the yuan and enhance its stability than to move China to some kind of gold standard.

That’s because it would negate the massive advantages of operating a fiat currency system, not the least of which includes unrestricted money-printing to spend as the administration wishes.

But the motivation to build large gold reserves still runs deep. China just needs the right opportunity, and, with the way things are going, the United States just might deliver that…

Consider that there will be another financial crisis, it’s only a question of when. Former Treasury Secretary Tim Geithner warned of this himself, as I’ve discussed here previously.

If the United States is once again the epicenter of the next financial implosion (and, with things as they are, there’s not much reason to believe otherwise), it will be that much easier for other superpowers, like China and Russia, to swing the world reserve currency system into their orbit.

In this kind of scenario, the outsized role (and prestige) of the U.S. dollar would likely diminish just as quickly as China’s yuan, padded by immense gold reserves, would soar.

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US Silver Production Continues to Crash

Last year, the precious metals community was abuzz with the fact that US silver production crashed by roughly 20% in September. This news should have been significant and should have caused a surge higher in the silver price, but alas, as we now know, this was not the case.

Silver prices continue to suffer stagnation and outright depression; they have plummeted to the $13.00 range from their previous high near $50.00 only a few short years ago.

This has had the effect of depressing the precious metals market, and those with "weak hands" have completely and utterly jumped ship as the markets tell investors that the "sky is falling" and prices will never move higher again.

This low in prices has had one major effect: it has caused a massive increase in demand for physical metals. This, in fact, is the only long-term thing that investors should be thinking about, given the incredible tightness and scarcity of this metal.

Adding to this scarcity is the fact that US silver production has not recovered in the least bit since last September’s report; in fact, it has continued to get worse and go lower.

Recent reports show that silver production in the US fell to 84.6 metric tonnes in October 2015, down from 103 metric tonnes the year prior. This means that even after the huge drop of nearly 20% in September, silver production continued to plunge by another 18% in October.

How long can this farce go on? How long can the "tail wag the dog" and the paper price dominate the true, real physical market? The latter should, in fact, be dictating the price.

This is what we know. Prices are at absurdly cheap levels, production is crashing and demand for physical silver remains high. It shouldn't take a rocket scientist to figure out the inevitable direction of the price of this metal going forward into the future.

It is only a matter of time before the free market exerts itself and silver breaks free from its shackles. It is only a matter of time before investors are rewarded for their conviction and fortitude. It is only a matter of time before the price of silver explodes higher. Until then, sit tight and be right, because know this: you are.

- Source, Nathan McDonald via the Sprott Money Blog

Rate Hike: Beginning Of The End For Confidence In Fed - Grant Williams

Nothing was solved in the aftermath of the Great Recession. Instead, the Fed used some hocus pocus magic tricks to prop up the system, but Grant Williams says it will all come to an end when the confidence in the dollar runs out.

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The Falicy of the Welfare State

"It is easy to be conspicuously 'compassionate' if others are being forced to pay the cost."

- Murray Rothbard

Gold-Backed Ruble, Yuan To Trigger Global De-Dollarization

A gold-backed ruble and gold-backed yuan could start a 'snowball exit' from dollar F. William Engdahl notes, adding that it will diminish America's ability to use the reserve dollar role to finance Washington's perpetual overseas wars.
The irony of the situation is that the central banks of China, Russia, Brazil and other countries "diametrically opposed" to US foreign policy course are forced to stockpile dollars in the form of "safe" US Treasury debt in order to protect their economies, American-German researcher, historian and strategic risk consultant F. William Engdahl stresses.

The truth of the matter is that the role of the US dollar as the world's major reserve currency is the countries' economic Achilles Heel, the strategic risk consultant elaborates.

At the same time, by buying US Treasury debt in dollars, they are de facto financing Washington's "endless" overseas military operations.

Fortunately, "[t]hat's quietly changing. In 2014 Russia and China signed two mammoth 30-year contracts for Russian gas to China. The contracts specified that the exchange would be done in Renminbi [yuan] and Russian rubles, not in dollars. That was the beginning of an accelerating process of de-dollarization that is underway today," Engdahl writes in his article for New Eastern Outlook.

© SPUTNIK/ ALEXEI DRUZHININ
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The researcher points out that on November 27 Russia's Central Bank reported that it has included the Chinese Renminbi (yuan) into its official reserves for the first time.

Furthermore, in August 2015 Russian currency traders bought almost 18 billion yuan and only 3 billion US dollars. It is obvious that Russia is gradually increasing the use of the yuan in Russian financial markets, substituting it for the US dollar.

"But the actions of Russia and China to replace the dollar as mediating currency in their mutual trade, a trade whose volume has grown significantly since US and EU sanctions in March 2014, are not the end of it," the researcher remarks.

According to Engdahl, there are clear signs showing that gold "is about to make dramatic return to the world monetary stage."

And it's not all good news for Washington.

While it is believed that the US Federal Reserve holds about 8,133 tons of gold, the rumors circulated that things are not what they seem and "the gold chamber of Fort Knox" are nearly empty, Engdahl narrates.

Adding more fuel to the fire are doubts surrounding US' official gold statistics, a strange event occurred in 2012.

"In 2012 the German Government asked the Federal Reserve to return German central bank gold 'held in custody' for the Bundesbank by the Fed. Shocking the world, the US central bank refused to give Germany her gold back, using the flimsy excuse that the Federal Reserve 'could not differentiate German gold bars from US ones…' Perhaps we are to believe the auditors of US Federal Reserve gold were laid off in the US budget cuts?" the researcher asks.

© SPUTNIK/ VALERY MELNIKOV
China Supports Putin's Proposal to Create United Anti-Terrorist Front

Engdahl remarks, that Germany is considered the second-largest gold holder with its reserves of 3,381 tons of golden ingots.

Meanwhile, Moscow and Beijing are boosting their gold holdings steadily.

Engdahl emphasizes that from January 2013 Russia's official gold reserves increased by 129 percent to 1,352 tons as of September 30, 2015, adding that during "the dark Yeltsin years" of the 1990s Russia's golden vaults contain only 343 tons.

"Russia now holds as many ounces of gold as the gold exchange-traded funds (ETFs) do," he stresses.

According to the researcher, Russia and China are decisively paving the way for the world economy de-dollarization.

"A Russian-Chinese alternative to the dollar in the form of a gold-backed ruble and gold-backed Renminbi or yuan, could start a snowball exit from the US dollar, and with it, a severe decline in America's ability to use the reserve dollar role to finance her wars with other peoples' money," Engdahl concludes.

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Federal Reserve Is A Giant Kazoo-Playing Squid Drowning Out Beautiful Music Of Free Market Orchestra

Mike Maloney & Stefan Molyneaux discuss the delusion that central planners suffer from, and the unseen damages that they bestow upon humanity.

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A Free Market is the Real Market

"Whatever the Fed imagines they can control and whatever their real intentions are, a central authority cannot optimally set prices that are in line with people's preferences. Unhampered markets are the only way that prices can reflect people's real preferences."

- Jonathan Newman, Mises Institute

2015 Silver Wrap-up and Drutter's "Price vs. Demand" Divergence

Data, analysis, graphs, and commentary on silver, gold, platinum, oil, currencies, bitcoin, and more. Includes an in-depth discussion of the price versus demand divergence first noticed in early 2013.

These are MY findings and opinions. Use them as one way to help make your OWN.

BIG love and respect to VECity (who produces a lot of Disl Automatic's best tracks) for letting us listen to his Christmas track at the end of this video!

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Ron Paul On Buying Gold And Concerns Of Monetary Collapse

Former Rep. Ron Paul, (R-Texas), on investing in gold and concerns of a potential collapse of the monetary system.

The Fed Is Between The Biggest Rock And A Hard Place In Monetary History

Why Jim Grant Owns Gold

United States Mint Silver Bullion Sales Headed For New Record

American Eagle silver bullion coin sales are headed toward another year of record breaking sales.

2015 sales year-to-date have exceeded the same period in 2014. Sales through the third week in October are 38,986,000 ounces compared to last year’s 38,121,000 ounces. If this sales trend continues, the total number of ounces sold in 2015 will exceed last year’s record of 44,006,000.

Sales would have been even higher except that demand has been so high, it has wiped out the United States Mint’s inventories and outstripped its ability to produce fast enough to replenish those inventories. The coins have been on and off allocation for the past six months.

This number has been nothing short of astounding. Pre-Financial Crisis sales were 9,887,000 ounces in 1997. They doubled in 2008 to 19,583,500 ounces and they doubled again by 2011 to 39,868,500 ounces. Sales have increased and set new historical records every year except 2012.

What is behind this history making demand for U.S.-made silver bullion coins? While it is hard to say definitively, there are several likely reasons.

The weakening American economy has cast doubt on the efficacy of quantitative easing and low interest rates, which in turn impacts confidence in the dollar. However, currently the dollar is stronger than its peers and deflation is more of a fear than inflation. But in times of economic uncertainty, investors usually want to hedge their bets by diversifying their portfolios into tangible assets like silver.

Most individual investors do not have the same hedging alternatives that institutional investors do. Esoteric derivatives and even expensive gold are usually out of reach for most individual investors. Silver is cheaper and therefore more affordable than gold, which is appealing to smaller individual investors.

Silver has become a speculative investment because the silver-to-gold ratio is out of whack. The historical ratio in the modern economic era is 50 ounces of silver to buy one ounce of gold. Today, it takes 74 ounces of silver to buy one ounce of gold. Either gold is overpriced or silver is underpriced. Given that silver prices are at five year lows, speculative investors are betting on the higher probability that silver is underpriced.

It is a definitive fact is that the record breaking demand for American Eagle bullion coins cannot be met by all the 440,555,000 ounces minted and issued by the United States Mint since the program began in 1986.

This demand has required the Mint to break manufacturing records each year, only to continue to have supply fall short of demand. This trend is likely to continue until individual investors are convinced that the U.S. economy has fully recovered and is stable.

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There Has to be a Collapse Way Bigger Than 2008

Money manager Eric Sprott has not lost his faith in owning physical gold and silver. Sprott contends, “I don’t lose any sleep over the price of gold going down in the sense that I believe what I believe. I believe it’s been manipulated. It’s very much about currency and economics of the Keynesian scheme that we’re going to spend money, print money and it’s all going to work. It’s not working. I don’t want to wait and find out the day it falls apart because when it falls apart someday, then it will be too late. I want to be positioned beforehand. I can remember shorting stocks before March of 2000. It was a bit of a rough ride for three months, but my gosh, when it rolled over . . . you have to be a little bit early on things. I believe the last four years have been orderly and created to be difficult. I think gold would have gone up, but they could not stand for it to go up because they were printing money. If you are printing money and gold goes up, everybody figures it out. . . . I’ve been around for a while, and I have the patience to hang in there. I have been a buyer of gold stocks, and so I am hopeful this will end up being a very, very rewarding trade.”

Sprott predicts, “There has to be a collapse. It will be way bigger than 2008. We had a debt problem in ‘07 and ‘08 and the debt has exploded.”

Join Greg Hunter as he goes One-on-One with Eric Sprott, the Chairman of Sprott Inc.

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China Could Reprice Gold To $100,000 Per Ounce

Financial writer and gold expert Bill Holter contends China has enormous debt problems, but a very good plan B. Holter explains, “China used fiat debt to build real infrastructure, and when the system blows up, the fiat debt blows away and they are left with infrastructure. Do they have 20% bad loans? They very well could and probably do. If it is true that they are going to have a debt blow up, don’t forget China has been importing big tonnage of gold for years now. Over the last five years, they have imported 9,000 tons of gold. Their way out is the old way out. The old way out was to revalue gold higher. They could revalue gold and step up and say they will pay $50,000 or $100,000 per ounce for any and all ounces for sale. You can’t say there is not enough gold. What you can say is that it’s not priced correctly to support the system. If they have an implosion of debt which leaves their balance sheets impaired, the way to recapitalize the balance sheets is to revalue the price of gold higher. It creates capital, in other words.”

How about the U.S. debt problem? Holter says, “That does not and cannot work for the U.S. because we have offloaded our gold. Simple math tells you the gold that China received has to come from somewhere, and that only somewhere in the world is Western U.S. vaults.”

Could the U.S. still have its more than 8,000 tons of gold? Holter says, “That’s pure ‘hopium’ that the U.S. still has their gold. Common sense and logic tells you that the gold is gone.”

So, has the U.S. budget and debt ceiling deal fixed anything? Holter says, “If they didn’t raise the debt ceiling, there would have been an immediate implosion. You have to understand, Americans are the only people on earth that aren’t laughing at the debt ceiling. Foreigners are laughing at it. You are talking about $20 trillion. It can’t be paid. We are at 110% of GDP already, and we’re the reserve currency.”

Holter goes on to say, “It’s another bubble. It’s going to burst, and the banks are in worse condition now from a debt to equity standpoint. Nothing has changed–it’s just bigger.”

Holter worries about possible deals between Saudi Arabia and Russia that could impair the petro-dollar. Holter says, “The (dollar) dam is leaking, at this point, because there is less and less use of the dollars around the world. . . . If Saudi Arabia were to say we’ll accept euros, yuan or rubles for oil or if they said we won’t accept dollars anymore, that’s like pulling a center piece out of a dam. It will break, and it’s over for the dollar. They could do that, and they could get bombed back to the stone-age, but I am sure it’s been talked about.”

Holter says there is “no rule of law,” and criminal activity has suppressed the price of physical gold. Holter says, “We have been through a four year period of time where paper gold has been pounding the price of physical gold. You have people who were strong legged, hard money guys who are weak in the knees now, and they shouldn’t be. My hope is we can strengthen some weak knees, to not sell you only insurance in a financial Armageddon. It is mathematically coming. There is absolutely no possible exit with the system intact and the rule of law.”

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