Home » Currency War » China Enjoying Gold Clearance Sale

China Enjoying Gold Clearance Sale

by John Rubino on October 14, 2013 · 34 comments

Analyses of China’s massive appetite for gold are everywhere lately. But the following chart, which appeared today in a GoldCore market update was especially striking because it compares 2013 demand with that of 2012 – which was a big year in its own right. Through August, China has imported 994 tons of gold through Hong Kong, versus 511 tons in the year-ago period. And that doesn’t include the production of China’s domestic gold mines (300 or so tons, all of which stays within the country) and whatever else finds its way in through other ports. Assume monthly imports for the rest of the year average 100 tons, add in domestic gold production, and China will have accumulated at least 1,700 tons of gold in one year.

China gold imports

To put this in perspective, Germany claims gold reserves of a bit more than 3,000 tons (though much of this is stored in the US and has probably been loaned out and replaced with a financial asset called a “gold lease” which is only as valuable as the big US money center banks are solvent). So in one year China will have accumulated gold equal to more than half the reserves of one of the West’s financial and industrial powers.

Why? Well, they could simply be investing in something they expect to go up, much like the typical American gold/silver coin buyer of the past few years. Or – way more interesting and probably more likely – they could be planning to back their currency with gold and push the dollar to the sidelines. One hint that a gold-backed yuan is being contemplated came in early 2013 when Yao Yudong of the Chinese central bank’s monetary policy committee called for a new Bretton Woods system. Bretton Woods was the post-World War II fixed-exchange-rate system in which one currency – the dollar – was convertible to gold, while other currencies were pegged to the dollar. A new Bretton Woods-style monetary system, designed when China has the world’s only gold-backed currency, would presumably have the yuan at its center and the dollar, euro and yen as mere satellite currencies.

More recently, China’s official press agency, Xinhua, published an article that calls for a “de-Americanized world” that includes a new reserve currency.

With the rest of the world annoyed by America’s abuse of the limitless credit card that is an un-backed global reserve currency – especially the global surveillance state we’ve created with all that free money – it’s not a surprise that lots of people would prefer a different system. And at the rate gold is flowing from West to East, it might not be long before the latter has the leverage to make it happen.

At which point we in the US would have to start living within our means. Since the difference between Washington’s tax revenue and its present spending and future commitments, when calculated honestly, is about $6 trillion a year, or roughly one-third of U.S. GDP, the cutbacks required to bring its finances into balance would be a lot like what Greece is going through. Except that we’ll still have a printing press. Get ready to make history…

  • sciaboy

    The best part is they are using the good ole US dollar fiat to buy said gold. Makes perfect sense. Yet gold and silver are sitting so low it’s a sad joke really, unless one has plenty of dry powder to pick more up

    • LoungeLizard

      Text book example of Gresham’s Law in action.

    • whateverdude

      please contact Dr. Ben Bernanke at Federal Reserve bank for a fresh supply of dry powder. he will be happy to oblige if you pretend that you are a too-big-to-fail liquidity-challenged banker.

  • retired


  • retired

    JFK tried something similar with executive order 11110 in 1963 & look what happened to him a few months later!
    Early the next year,1964, LBJ began actions to remove silver & add base metals to all new U.S. coins.Federal Reserve conspiracy anyone?

    • Jeff Winch

      no one can stop the Chinese version of this.

    • Fred762

      Yup..could be. He was also allegedly trying to keep us out of Viet Nam, but musta forgot that the big oil companies had found huge new oil fields in the S China Sea,[ off the western VN coast] a few yrs before. I guess he thought he was president? Try reading the new book “Who really Killed Kennedy” It is very interesting…..

    • Sueychop

      You mean its all about the money? Its ALL about the money???? Nawwww, really?

      Of course!

  • Dan

    If all the Gold in the US and in the world that was owed to us was accumulated it would amount to 57% of the world’s reserves. We could go on the gold standard and go back to the way it was previous to Nixon’s administration. This could happen when the inevitable collapse comes…..and the government institutes the IEEPA, Emergency Economic Powers Act, which FDR used to shut down the banks in 1933. The world is getting tired of the Congress and the FED printing money, as well as the American people.

    • roddy6667

      That’s the problem. The physical gold is not in the US anymore. And good luck getting real gold back from other countries that hold only paper gold. China holds real gold.

      • Dan

        I got my information from the book Currency Wars, by James Rickards, who knows more about these things than you or I……………..He stated that after confiscating foreign official and most private gold on US soil it would posses around 57% of all official gold reserves in the world, Remember FDR did the same thing and saved capitalism form itself and the dollar became the worlds reserve currency and we could do it again if there was the right man in the White House. But it could only happen under dire consequences, and the Republican neoconfederates are pushing the limits with their destructive revolt.

        • LoungeLizard

          Ahhh, I get you now Dan. I’m Sorry.

          Yes, World War III and another Gold theft. That’ll fix the problem.

        • PaperIsPoverty

          Yeah, Rickards does make the point that while US gold may have been sold on paper, it’s his belief that it has not moved physically, the implication being that possession is 9 tenths of the law. He suggests foreign sovereigns like Germany will see their gold annexed by the US and presumably any other paper claims will be defaulted on. There’s also what sounds like a warning, in that most of this gold is in the hands of the military. He is part of the military industrial complex himself so I’m not sure what to make of that last bit: warning or bravado?

          • LoungeLizard

            “He is part of the military industrial complex himself”


    • LoungeLizard

      @ Dan

      Don’t take this the wrong way, but it’s a tad more complicated than that –

      “If all the Gold in the US and in the world that was owed to us was accumulated it would amount to 57% of the world’s reserves.”

      Can you cite some legitimate sources that actually detail how much Gold the US is owed (and by whom)? I think you may find it’s actually the other way around.

      Add that to the stash that doesn’t exist in Fort Knox, or the FBNY, and I believe your idea abruptly stalls.

      You’re right about a couple of things though – “The world is getting *tired of the Congress and the FED printing money” – *Where ‘tired’ is a touch of blind understatement on your behalf. We’re actually starting to get quite pissed off.

      However, I’m not quite sure we’re all getting tired of the American people (Just yet). Well, not all of them anyway (You can keep Eric Holder & Miley Cyrus). Most of you are descendants of the same people as the rest of us. But I am beginning to believe we’re all starting to think along the same lines. Namely: That the US needs to put it’s cock back in it’s trousers and stop waving it around. Stop holding the world to financial ransom, Pull your troops out of all overseas sovereign states that you’ve managed to fuck up beyond all recognition, Rein in your terrorist banks (both foreign and domestic), Start to practice what you preach (Democracy; Remember that?), Learn to live within your means, Give up your ‘Reserve’ currency, Stop being so consumerist, obnoxious and greedy, & finally, do something about your fascist government(s).

      Contrary to recent political gibberish you’re not an ‘exceptional’ race. Your shit stinks just as awfully as the rest of humanity, and as far as this current era and the history books are concerned it probably stinks a little bit more….

      The world will take a big sigh of relief, commerce and cohesion will return, cooler heads will prevail and I expect things would move back to normal much faster than your above suggestion could ever hope to achieve.

      Besides all that, China and Russia now have all the Gold :)

      • Eatie Gourmet

        “Exceptional” refers to the liberty & freedoms the American people were bequeathed by our Founders, exceptional, as opposed to any other country in the world, as far as participatory government goes, in the opportunities that existed…

        Yep, “we the people” have allowed progressive politicians to completely screw it up over the last century.

        “Exceptional” has nothing to do with race, btw. It has to do with form of government.

        And, “besides all that”, don’t forget to add India to the big gold holders, along with Russia and China. But you’re right, not the USA — Ft Knox has been squandered.

        • LoungeLizard

          Please accept my apologies Eatie. You’re completely correct, ‘race’ was not a good word to use.

          I also agree, without prejudice, that the US constitution and bill of rights are some of the most amazing pieces of literature ever penned. I only wish my country had adopted something similar. I also agree that they are, as far as the history of modern man is concerned, nigh on ‘exceptional’. But, that was then. As you say, they and their implications have been reinterpreted, ignored, bastardised and amended to the point that the country they first helped to shape is now far from its original design.

          The United States of America is now no more ‘exceptional’ than any other central bank owned plutocracy anywhere else on earth. (Except, maybe, for the bloated US military).

          I’ve been fortunate in my life in that I’ve traveled to many countries around the globe, including the US. All can claim to be ‘Exceptional’ in their own unique way. Most of them actually are. But none, including the USA, are any more ‘exceptional’ than any other.

          That, I believe, was the point I was trying to put across. (Along with the fact that there’s no Gold left).

      • Mandii

        Yes – American imperialist attitude run amuck. There is a reason China is the world’ oldest continuous civilization. They have tremendous experience in the art of war.

  • Antiehypocrite

    Operation Northwoods – The U. S. Joint Chiefs of Staff Plan to Terrorize the U. S.
    Populace http://abcnews.go.com/US/story?id=92662&page=1

    – The Joint Chiefs
    are the 5 generals and admirals in charge of the 5 branches of the U. S
    military. In 1962, those men were George Decker (Army), David Shoup (Marines),
    Georg Anderson, Jr. (Navy), Curtis LeMay (Air Force), and Edwin Roland (Coast
    Guard), along with a few others, all chaired by Lyman Lemnitzer (Army). The
    entire board of the Joint Chiefs of Staff proposed, drafted, and agreed
    on a plan to concoct a casus belli for war against Communist Cuba, under
    Fidel Castro. Their collective motive was to reduce the constant threat of
    Communist encroachment into the Western Hemisphere, per the Monroe Doctrine.

    – This plan was named
    Operation Northwoods, and entailed the most impossibly indifferent cruelty ever
    envisioned by a government against its own people. In order to sway public
    sentiment in favor of the war, the Joint Chiefs planned to bomb high
    pedestrian-traffic areas in major American cities, including Miami, New York,
    Washington, D. C., and possibly Chicago and Los Angeles; to frame U. S. citizens
    for these bombings; to shoot innocent, unarmed civilians on the streets in full
    view of hundreds of witnesses; to napalm military and merchant vessels in port,
    while people were aboard; to sink vessels carrying Cuban refugees bound for
    Florida; to hijack planes for ransom.

    – Not only did every
    single member of the Joint Chiefs sign his approval of this plan, they then
    sent it to Secretary of Defense Robert McNamara for his approval, and then to
    President Kennedy. McNamara claimed years later never to have seen it, but that
    he would have rejected it. Kennedy, however, did receive it, and promptly
    called a meeting of the Joint Chiefs, in which he threatened, with severe
    profanity, to court martial and incarcerate every one of them. The President cannot
    actually do this, but can order the Congress and military branches to do so,
    and in these circumstances, they most certainly would have. But Kennedy decided
    that it would cause irreparable disrespect around the world for the U. S.
    military. He did remove Lemnitzer from his position as Chairman and assign him
    as Supreme Allied Commander in Europe, not much of a demotion.

    – Theorists claim
    that the military may have had a hand in Kennedy’s assassination because of his
    blistering rebuke of the Joint Chiefs. This, however, remains unproven.

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  • Bobbo

    China has no interest in switching to a gold standard. A gold standard would strengthen its currency, kill the export market, leave millions unemployed and potentially lead to politcal instability — the very thing that the Chinese political elite fears the most. China’s successful strategy for the last 30 years has been to become the manufacturing center of the world. It only accomplished this by keeping its currency artificially cheap. Now you are telling me they want to do precisely the opposite and make their currency the strongest in the world? It’ll never happen. Never.

    Yes, the Chinese make noise and complain that they do not like the dollar system. That’s certainly true. But it does not mean that they intend to replace the dollar system with their own gold-backed currency. For all their complaining, the Chinese have done quite well under the dollar system. It has allowed them to build up an impressive manufacturing base. It has allowed them to acquire western technology. It has allowed them to import a stunning amount of gold at artificially depressed rates. When the dollar house of cards collapses and the world comes up with a new currency system, the Chinese will find themselves well-positioned. But you should expect them to maintain the status quo right up to the point of collapse because it is in their interest to maintain the dollar system as long as possible. As long as the physical gold is flowing to China, the two trillion in T-bills doesn’t make a dime’s worth of difference.

    Bonus thought for the day: The goldbug community always suspects that the Fed is manipulating the gold market and pushing paper prices down. I suspect that the Chinese are the ones manipulating the paper markets and keeping the price artificially low so that they can import as much physical gold as they possibly can.

    • Tony D

      OK, who does the Chinese suppression link with the establishment of the PM exchange at Shanghai ?
      Also could the Fed be suppressing to keep the Chinese on side ?

    • Michael Clifford

      I agree that China will never have a gold standard type currency but they could mimic the Euro with gold on the balance sheet at market prices.
      This is a very powerful mechanism for control of ones currency.

  • Keisha

    yes yes keep the gold coming!

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  • Michael Clifford

    A key point often not covered is the price gold would have to be at to function in a new system. First it must be market to market or we just get another government controlled ‘gold standard’. Second at current prices China could have all the gold available for a small piece of it’s treasury holdings…why does it not have all it wants? Because at current prices no one with gold in significant quantities will sell.
    For gold to function as a reserve asset (as it already does for the Euro) it must be higher by an order of magnitude AT LEAST, may two.
    If gold is to be part of future settlement the paper market for gold must first die and then a real, physical only market can emerge. In time we will see true value of gold reflected in it’s price.

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  • Vic Moore

    EVER wonder why America is not mentioned in Revelation? We may not exist….

    We have no chance of defeating this situation unless we repent and ask GOD for help. The problems we have right now are due to the discipline we are receiving from GOD due to the fact that we have allowed others to remove GOD out of our lives. IF we do not go back to him, NOTHING will save this country! HE will allow us to be destroyed because of the ARROGANCE of our belief that we can do it by “fighting against the powers of evil”. PEOPLE, those “powers of evil have been brought to us by

    HE has taken down the hedge that protected us. It has been a gradual process
    beginning around 1962 when we removed GOD from our schools. It has been
    down-hill ever since because we have systematically removed GOD from everything in this Country.. Please read the book of ISAIAH. Israel went through the same thing. GOD can and will allow us to be taken down to NOTHING if we don’t repent, ask for forgiveness and change our ways. If we do not repent and continue with the pride in ourselves and our “battle for freedom” . We will find ourselves fighting against GOD. Where will that lead us you think???????? THIS IS JUDGEMENT people NOT good against evil!

    I Love this country and will give my life for it. WE NEED GOD’s help! DO not think that we can beat this evil on our own. READ just about ANY story of battle in the BIBLE. Those that had GOD on their side won. Those that did not…. LOST. There are many examples of what I am speaking about folks. WE HAVE BEEN WARNED!!!!!!!!!!!!!

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