I. Introduction
China is known for its secrecy. But in the end, are all governments not alike in that aspect? This brief article calls to question the recent exposure of China's gold holdings (official nation reserves). Said simply – things don't add up.
China last reported its gold reserves in 2009 with 1,054 tons and during summer 2015 they claim to have 1,658 tons. Besides the fact that China is the world's number one gold producer and one of the largest importers of gold while simultaneously starting the Shanghai Gold Exchange (a rival to the U.S. Comex) which is a physical gold delivery market, China also now is part of the global gold fix and two weeks after it was accepted is openly discussing fixing gold in Yuan.
(Source: Zero Hedge)
The China and India markets have accounted for more than half of all global gold consumption for the past few years, however both countries hold little sway over the daily spot-pricing of the precious metal, says Editor Li Kun from CCTV.
One would have expected, as many analysts have, that China's gold reserves would more than have tripled since 2009.
Yet, 6 years later, China claims to have boosted their gold reserves by 600 tons – that is 100 tons a year. Many analysts aren't so quick to believe the Chinese on this one. And neither does this author.
II. The Argument Presented
Examine the photo below:
(Source: PBC.GOV)
To begin, the intelligent investor must scratch his or her head with curiosity that during the month of June, which was the worst stock market collapse in Chinese history (one could only have expected this with such low rates for so long; yet even the Chinese have not learned from history), after 6 long years the gold reserves conveniently are revealed. By these indicators, China's MoM (month over month) reserves increased by roughly 60%. Thus as stocks collapse and the banks are lending billions to try and salvage a floor in Chinese equity prices, other extreme measures are being implemented such as freezing/halting trillions of dollars worth of trading and even the draconian method of arresting short sellers.
