Occasionally a discussion in the 'comments' section is the genesis of a Thought that warrants a new post. Hat tip to Martijn and Max Keiser for this one.
Watch this 10 minute video. It is a good discussion about what is needed to create a new reserve currency...
In the video, Max Keiser essentially says China is not a worthy adversary to the dollar because it only has 600 tonnes of gold.
Max is referring to the World Gold Council's official accounting of CB gold when he says that China only has 600 tonnes. These numbers are based on voluntary reporting by the members.
If you go to the Wikipedia page, you will notice that China is the only country in the world with a nice clean number reported, 600.0 metric tonnes exactly. All the other countries have reported fractional numbers like 765.2.
While you are there, you can click on the History tab at the top, and then go to the earliest version of the page, which happens to be back in 2004. You will notice that the numbers haven't changed much. In fact, China hasn't changed at all.
And remember, China recently announced it's desire to obtain 4,000 tonnes of gold... officially.
Back in 1998 Another wrote about China accumulating a lot of gold through back channels that would not affect the price or show up on official records. According to Another, the special ongoing deal between the dollar faction (US and UK) and a few Middle East oil producers was noticed by China. And China wanted a piece of this deal. Here are a few references from Another...
Sir, Some think my thoughts are as "hogwash"? Several CBs use "agents" to buy gold. Some agents, small, some large, some "BIG". They buy much from $365 down, all last year. Even today, it does not show. This world, it is strange, yes? I would say "Big Trader" has little time for "washing the hog"! But you sir have a large shovel and dig very deep!
It is written, "all holes in earth lead to china"!
Any nation/state can put it's economy/currency on a gold standard. They only have two requirements. Own a stockpile of gold and raise the price very high!
In the past, when currencies were gold, a nation could not lower the amount of gold backing it's currency ( raise the price of gold ) because it lowered the currency unit worldwide and created payment imbalances. Today, no nation/currency is on a gold standard. The first country that starts will own the rest for some time.
Find me a country with many needed resources, little debt in relation to the assets and a national pride to lead? Let them price gold at many thousands not only in their currency but also in their resources! The world would buy from them, cheaply in gold but dearly in all other unbacked currencies. The markets would do the rest!
The large modern currencies, of today have only debt ridden economies to back them. They cannot change as debt blocks their path. "To change is to live and to live, some debts must die". The owners of much of this debt must lose if change is to occur. Even the new EURO will not be backed by gold! It will HOLD gold only as insurance against the worst outcome, war.
Yes, an oil state comes to mind! It could even be China!
I think, China was buying a great deal of gold and gold commitments ( paper gold ) thru a HK trader. They became much of the "not enough physical gold " problem for the oil/gold trade. China dumped much of this paper and continued to take in gold even today. Japan is a story of "no happy ending" as they are seen as "not aligned with Europe" or the BIS way of things. The EURO may send Japan down with the USA dollar! Asia will be lead by China, as they do understand a "Euro world". The ECB does know that "all holes in earth, lead to china"!
They brought the Chinese onto their side by neutralizing the rest of the Asian competition. China hates Japan and would like nothing better than to watch them die as they stick with the US and the dollar. China also picked up huge gold holdings these last few years with the help of the BIS. They will easily fit into the Euro world and enjoy a massive trading block with Europe!
Sir, I feel he is correct in this thought. Europe does grasp for a relationship with Asia as the US did have with the Japan. It would build a mighty economy on a foundation of oil and gold as backing for new money. As China and Arabia was once a part of the Europe economy, in a small way. They may now return with no fear of Russia. Britain? A lost nation. Japan? This one is "of the American Economy" and is to live and die by it! They will seek your Alaska oil before loss of face with gold. A dead Yen be a dead Japan.
Mr. Powell, In China, persons own gold for reasons that reach far from the past. They see the price of gold, in dollar and Yaun terms, not as gold value rising or falling but as these currencies rising or falling. As such, gold is viewed as "the stable wealth" and currencies as the "changing asset value"! Not unlike the Dow Jones stocks, always moving, so it is of the paper currencies of today. . Much is written of how gold does not come to China, as it is "expensive" and "citizens have no money to buy"! I say, they have money, just not your paper money, as they were taking in gold from before the birth of currency and will do so till the end of time! In that country, China, where gold was purchased in great quantities, from before the existence of America, this will not change if the Yuan is devalued.
What will change is the currency China uses in world trade. They have yet to "secure" the Euro against their US dollars held in Hong Kong. They will make this trade for the benefit of their "old trading partners" that ended with the "Orient Express"! If traders sell gold as the Yuan is devalued, I think that gold will ride this train route to Berlin, Yes?
Poland and China are good customers for the BIS. This is real physical gold they are taking out of circulation, not the pay me back when you have a chance lease deals. They really do have the IMF/Dollar countries over the barrel. Under these conditions it's easy for them to drain the Canadian gold reserves. Soon, these goldless countries will be left with nothing but high yield US dollar treasury notes. Later, when new issues of this paper is yielding 15%-20% these Central Banks will wish for the day when they held an assetthat offered no return! Gold!
The world currency crisis is heading for resolution. I think most of the reallocation of reserve assets is complete. Now the war can commence. The Dollar NEEDS a lower gold price to keep it up. London tried to use the Russian gold story as an excuse to send it down. My understanding is that whatever collateral was freed up from the USSR , the BIS picked up for others. It left the brokers selling leases for almost nothing or 1/2% or so. No one was buying them so the rate just fell on no volume. This was a lucky move for them as the perception was that massive sales were taking place. I don't think the BIS wants to be seen as a currency destroyer so they are doing the buying quietly.
As Martijn said, "the plot thickens..” Let's dig further, this is getting interesting... In 2001, FOA mentioned 'Big Trader' in this post...
Japan is a different problem. They have been locked into the US dollar economy for so long that they cannot escape. There is simply no way that China will let them into the Euro house. The HK / China central bank system, also known as Big Trader, simply wields too much economic sway between Asia and Europe. In historical precedent, the orient express always headed to Europe and never saw "The Japans".
Actually, Japan doesn't want to go there and has risked a decade of time waiting for some economic change in the US. I have said from way back, that Japan will go down with our (US) inflationary tide. They will waste away their dollar assets following our lead. Those that think that these peoples want to be part of a third world currency block do not know them. I do,,,, but that is another story.
With this in mind, let us jump back to 1997 and peek at a few times Another mentioned 'Big Trader'...
When everyone that has exchanged gold for paper finds out it's real price, in oil terms they will try to get it back. The great scramble that "Big Trader" understood may be very, very close.
Now my friends you know where we are at and with a little thought , where we are going.
If real physical gold trading dries up it's price will rise forcing down the value of oil. All this year physical gold volume kept drying up as paper short volume exploded. But,each time before a squeeze started to run the price the CBs would sell thru LBMA . You see, when paper trading ( of anything ) volume dries up it's a bearish sign but when real physical gold volume drops it's bullish! Thats because gold is being cornered on a scale never seen in history. LBMA is doing it's best to show real volume exists! The problem is, "if the CBs don't expand their roll as "primary suppliers" LBMA will implode and in the process create the greatest bull market in oil and gold the world has ever seen. That is why some "Big Traders" are holding ONLY gold as events unfold. Interesting, don't you think?
A big change in the gold market actually started last spring. You couldn't tell by the charts or news stories but it had the CB trading rooms going nuts. Up untill then they were using 3rd party transactions to sell, then the boomshell hit that the Merchant Banks were doing deals for 10 to 20 times what was offered! Well "boys will be boys" and someone is now stuck, big time! That's why "Big Trader" and his bunch closed out all paper and pulled in bullion. Don't worry about the CBs selling everything, the market is huge compared TO WHAT THEY HAVE! And Comex is nothing, if "only a silly game". Worldwide trading in gold could be cut in half and still equal all the metal in existance!
Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff.
One more thing, Big trader left HK some time ago and is now in a waiting game.
Big Trader is ( was ) from HK and is in the business.
Date: Sun Nov 09 1997 21:58
Shek ( home ) ID#287279:
Another, 6-7 months ago, a poster ( BigTrader ) made similar predictions to yours. He even gave timeframes. His final and boldest prediction coincided with a big drop in gold prices. BigTrader vanished from this site.
Big Trader has vanished from view, but he and his gold still exist.
The great mistake by the BIS was in underestimating the Asians. Some big traders said they would buy it all below $365+/- and they did. That's what forced LBMA to go on a spree of paper selling! Now, it's a mess.
At some point the fire in Asia will drive all of them into gold. It will end at that time.
ALL: I do not offer to prove my thoughts. If what is written was easy for all to find, the information would be of no use to you.
"Today, the paper gold market only affects the physical as the price is pushed down! It is the physical market that destroys the paper gold as price rises. In a falling market, paper can be settled in physical gold or cash! In a limit up market, paper can only be settled in more paper or cash!"
It is of this knowledge that wealthy ones and some CBs are taking in physical gold.
Look to LBMA, for currency looking for gold! Compare the Comex average open interest with it's average daily trading volume. Now use average daily trading volume at LBMA and convert to open interest in London, using comex ratio. Here you will find "real currency" in "paid for" gold derivatives ( not futures ) ! This money is now looking to convert to physical! It is caught in this paper with no way out! Know that this amount covers not CB gold moved by big trader! That wealth is safe, as it is for the good of all in those countries!
On a closing note, I will point out that nothing at all happens in China without the blessing of the Communist Party elite. It is truly a two-tiered society in China. There are the people, and then there are the Communist Party insiders. These insiders live extremely well. And they use the Communist system for personal gain in any and every aspect of life. So if the "official" gold held by the BOC belongs to the people of the People's Republic of China, rest assured that the actual decision makers have also set some "unofficial" gold aside for themselves.