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China And Gold Reserves

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Author Previous TopicReplies: 7 / Views: 658Next Topic  
Valued Member
United States
499 Posts
 Posted 01/04/2023  4:07 pm Show Profile   Bookmark this topic Add jaxenro to your friends list Get a Link to this Message
China claims gold reserves of around 1,948 metric tonnes versus the US at 8,133, Germany at 3,359, Italy, France, and Russia all in the 2,000's.

We all know the numbers dont add up. For instance China has domestically produced close to 400 tonnes a year in govt mines that they report and by law can't export it. Plus they own gold mines world wide and buy on the open market. Their actual reserves are currently estimated to be doulbe the US if not more

So my question. What happens to the price if China admits to what it actually owns? What does it do to the dollar versus the yuan?
Bedrock of the Community
20702 Posts
 Posted 01/04/2023  4:29 pm  Show Profile   Bookmark this reply Add sel_69l to your friends list Get a Link to this Reply
Gold has always been the subject of market speculation.
For this reason if you wish to make an investment gamble it should be small, relative to all of of your other assets.

As far as China is concerned, we are dealing with very rubbery information.
Bedrock of the Community
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United States
76314 Posts
 Posted 01/04/2023  5:13 pm  Show Profile   Bookmark this reply Add Coinfrog to your friends list Get a Link to this Reply
"Rubbery" is being generous. It is no doubt false and deliberately misleading.
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15068 Posts
 Posted 01/04/2023  6:31 pm  Show Profile   Bookmark this reply Add Sap to your friends list Get a Link to this Reply
I don't see why the price would change, unless China tried to actually do something with it. Gold sitting in some secret government stash is the same as gold sitting in a museum; it's not on the market, so doesn't affect the market price.

As for dollar vs yuan, I don't see it making a difference there either. Currencies aren't valued by the size of their country's gold stash any more. That USA gold stash you mention? It's worth US$485 billion at current market values. Might sound like a lot, but there are $2.1 trillion physical US dollars in existence (coins and banknotes), plus an extra 19 trillion dollars of virtual electronic money. The links between gold and currency are very tenuous these days.

China is the same, or even more so. As a Communist government, they must still hold to the theoretical core tenet of Communism that money is a temporary, necessary evil that will one day be abolished when the utopia finally arrives. Communist governments have never seen the need to "back their currency" in anything other than good faith in the State. Which is why Communist governments always make their coins and banknotes out of cheap, worthless materials that self-destruct if you attempt to bury them; you're supposed to put your faith in the State, not your stash of money.

Which is, in turn, why a Communist-backed currency will never become a world trade currency. The Communists could, at any time, declare some or all of their money to be worthless, and everybody knows this. Ask the North Koreans what that feels like; the DPRK has revoked their money seven times in the past 70 years, most recently and thoroughly in 2009; that's an average of once a decade, everybody's money simply... disappeared.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
Valued Member
United States
499 Posts
 Posted 01/04/2023  6:49 pm  Show Profile   Bookmark this reply Add jaxenro to your friends list Get a Link to this Reply
I don't "invest" in metals, and personal preference I mainly stack silver, but it is a small part of my portfolio and mostly an inflation hedge. I view it as another way of sitting on cash as in the long run it about holds parity with inflation.

This is more of an academic question. Nothing personal to anyone here, especially as there are some sharp and knowledgable members here, but only a fool takes investment advice from message boards.

if you read through this article he makes some interesting observations and conclusions at the end. Not sure if I agree with all of them but it is a discussion starter

Pillar of the Community
United States
5379 Posts
 Posted 01/04/2023  10:35 pm  Show Profile   Bookmark this reply Add macmercury to your friends list Get a Link to this Reply
Story of counterfeit products made in China, and gold is of no exception, few years back one of the largest China jeweler Kingold have sizable gold bars as collateral in Chinese State run banks, while conducting other type of business/investment beside jewellery. Notably REIT investments, Kingold was involved in the beginning of the real estate bubble that have left many Chinese investors with just a piece of document, with nothing to show but buyer agree to continue to mortgage their future housing project, hoping they can profit in the future by selling already in a inflated market.

The problem is this China real estate bubble has reached its explosive stage, with China Evergrande largest Realtor defaulting bond payment. Anyway; going back to the counterfeit gold, one of the creditor got into financial trouble and demanded Kingold in paying off its loan, with Kingold unable to make its timely payment, the bank dip into Kingold reserve, upon checking these gold, many bars has fillings beside actual gold content.

This has a chain reaction that cause other creditors to check Kingold reserve in their bank vault with counts of up to 22% of fake bars of China gold production, and approximately 4.2% of state gold reserves of 2019. The authority is still investigating, the self regulating Shanghai Gold Exchange promptly removed Kingold from its membership list, and Kingold is still operating today.

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Valued Member
United States
115 Posts
 Posted 01/07/2023  01:34 am  Show Profile   Bookmark this reply Add glenmorenee to your friends list Get a Link to this Reply
All of China's economic numbers have been exaggerated for the past who knows how many years. Those stated gold reserves are most certainly inflated. The most ludicrous claim would be that they are actually under reported.

Something that would never ever happen? Any major country publicly PROVING their gold reserves. For this simple reason alone you can conclude that there will never be a gold backed currency from anybody.
Valued Member
United States
115 Posts
 Posted 01/07/2023  01:37 am  Show Profile   Bookmark this reply Add glenmorenee to your friends list Get a Link to this Reply
"China almost certainly owns a lot more fake gold than anyone else".

There, I fixed it for you.
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