China and Gold
I received a "non-forwardable" report on China and their ongoing purchases of commodities. Thought I would share a couple of trinkets from the report:
Using 3/31/2009 figures.
China has $1.95 trillion in reserves.
China's reserves are more than twic the combined value of the European Union's gold reserves, Chile's annual copper production, Australia's annual iron ore exports and Oman's proven oil reserves.
China's reserves are about equal to the U.S.'s proven oil reserves, using $64 per barrel.
If China decided to put 5% of its reserves into gold, it would have to buy more than 3,000 tons of gold, or about one year of global production.
90 days of oil reserves (the Chinese govt target) would only cost $50 billion.
Chile, the largest copper producer in the world, produced 5.36 million long tons of copper in 2008. Total value of all that is just $37 billion.
Etc etc etc.
My point is simply that even if the Chinese just "dip their toes" into the commodities market, the ripples could be tsunami sized waves.
Buy gold and silver and platinum an palladium and copper and oil. I guess.
Using 3/31/2009 figures.
China has $1.95 trillion in reserves.
China's reserves are more than twic the combined value of the European Union's gold reserves, Chile's annual copper production, Australia's annual iron ore exports and Oman's proven oil reserves.
China's reserves are about equal to the U.S.'s proven oil reserves, using $64 per barrel.
If China decided to put 5% of its reserves into gold, it would have to buy more than 3,000 tons of gold, or about one year of global production.
90 days of oil reserves (the Chinese govt target) would only cost $50 billion.
Chile, the largest copper producer in the world, produced 5.36 million long tons of copper in 2008. Total value of all that is just $37 billion.
Etc etc etc.
My point is simply that even if the Chinese just "dip their toes" into the commodities market, the ripples could be tsunami sized waves.
Buy gold and silver and platinum an palladium and copper and oil. I guess.
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Replies to This Discussion
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Permalink Reply by coinnetwork on -
From Numismaster: http://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleI...
The article says that China wants to purchase $80 billion more worth of gold.
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Permalink Reply by Frank Charly on -
China clearly has the capacity and ability to rock the U.S. to its foundation. We thought that we could economically destroy communism but now the turnabout is that communism can destroy the U.S. brand of corrupt capitalism. What China's economists are saying about the U.S. dollar is never spoken about by the mainstream media. China buys gold and other commodities as we print worthless,outside the U. S., paper money. Since 2003 China has added over 400 tonnes of gold to its holdings. What if they decided that their no interest paying U.S. Treasury bonds of 763 billion dollars were nothing better than "junk bonds?"
Although on a global scale there still seems to be far too much manipulation of gold prices and today's predictions aren't worth anything tomorrow.
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Permalink Reply by Dave on
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Frank, I doubt this was your intention but your opening remarks could somewhat be interpreted to imply that communism is a better or at least more successful model. For the record – IMO – the reason the Chinese financial model is so lucrative at current times is the extreme difference in standards. They allow building construction that crumbles even during “weak” earthquakes – with seemingly no concern for the adults or children who may be in those buildings. So is it poor building codes or rampant corruption that allows this to happen?
They poison their own people and the rest of the world with tainted products like: Pet food, human baby food, milk, toys containing excessive lead… As long as they can produce it cheaply and sell it for a good profit then everyone over there seems willing to look the other way. That’s why they’re making so much money as a country. How many U.S. homes have taken a huge hit in value due to the sub-standard dry-wall that was imported from China? That big story made the news a year or so ago.
They have rampant human abuse over there and they treat a sizable segment of their huge population like slaves, which means they squeeze practically every last bit of productivity out of them for practically no pay.
Here in the U.S. we’re at the other extreme. We have to make everything idiot-proof or else we’ll get sued. Too many people here are OK with supporting those who are too lazy to support themselves – whether they’re domestic or an immigrant. AND our government has a fetish for spending money they don’t have. Our government is trying to enact policies to save credit card abusers from themselves yet our government is the biggest abuser of credit in the entire world. It’s a high price we have to pay. It will be an even higher price that our children and grand children will have to pay.
From an investment perspective, given what both China and the U.S. are doing, it’s hard to imagine gold being a bad investment at this time.
Frank Charly said:China clearly has the capacity and ability to rock the U.S. to its foundation. We thought that we could economically destroy communism but now the turnabout is that communism can destroy the U.S. brand of corrupt capitalism. What China's economists are saying about the U.S. dollar is never spoken about by the mainstream media. China buys gold and other commodities as we print worthless,outside the U. S., paper money. Since 2003 China has added over 400 tonnes of gold to its holdings. What if they decided that their no interest paying U.S. Treasury bonds of 763 billion dollars were nothing better than "junk bonds?"
Although on a global scale there still seems to be far too much manipulation of gold prices and today's predictions aren't worth anything tomorrow.
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Permalink Reply by John W on -
GREAT post Dave.
Regarding China and the U.S..... somewhere in the middle has to be more effective and still safe.
Dave said:Frank, I doubt this was your intention but your opening remarks could somewhat be interpreted to imply that communism is a better or at least more successful model. For the record – IMO – the reason the Chinese financial model is so lucrative at current times is the extreme difference in standards. They allow building construction that crumbles even during “weak” earthquakes – with seemingly no concern for the adults or children who may be in those buildings. So is it poor building codes or rampant corruption that allows this to happen?
They poison their own people and the rest of the world with tainted products like: Pet food, human baby food, milk, toys containing excessive lead… As long as they can produce it cheaply and sell it for a good profit then everyone over there seems willing to look the other way. That’s why they’re making so much money as a country. How many U.S. homes have taken a huge hit in value due to the sub-standard dry-wall that was imported from China? That big story made the news a year or so ago.
They have rampant human abuse over there and they treat a sizable segment of their huge population like slaves, which means they squeeze practically every last bit of productivity out of them for practically no pay.
Here in the U.S. we’re at the other extreme. We have to make everything idiot-proof or else we’ll get sued. Too many people here are OK with supporting those who are too lazy to support themselves – whether they’re domestic or an immigrant. AND our government has a fetish for spending money they don’t have. Our government is trying to enact policies to save credit card abusers from themselves yet our government is the biggest abuser of credit in the entire world. It’s a high price we have to pay. It will be an even higher price that our children and grand children will have to pay.
From an investment perspective, given what both China and the U.S. are doing, it’s hard to imagine gold being a bad investment at this time.
Frank Charly said:China clearly has the capacity and ability to rock the U.S. to its foundation. We thought that we could economically destroy communism but now the turnabout is that communism can destroy the U.S. brand of corrupt capitalism. What China's economists are saying about the U.S. dollar is never spoken about by the mainstream media. China buys gold and other commodities as we print worthless,outside the U. S., paper money. Since 2003 China has added over 400 tonnes of gold to its holdings. What if they decided that their no interest paying U.S. Treasury bonds of 763 billion dollars were nothing better than "junk bonds?"
Although on a global scale there still seems to be far too much manipulation of gold prices and today's predictions aren't worth anything tomorrow.
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Permalink Reply by Frank Charly on
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Dave: In no way did I imply that the Chinese society and its government are something to emulate. I am one of the great haters of Walmart who propagandize about what great employers they are. Even Goebbels wouldn't take them on as a client. I don't disagree with a thing you have said, only your interpretation of what I was saying. It just seems that every major mistake the Communist countries make , we want to replicate it, e.g. fighting in Afghanistan. Obama puts forth a so-called energy plan to suppress pollution when the greatest polluter is China. These are the silly actions, which will help destroy our economy. So we will continue to pour our dollars into China as they build up a military ,which has only one purpose and that is to militarily destroy the United States. So every time you go into Walmart you just bought another gun to shoot one of our soldiers in the back
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Permalink Reply by Lureuin on -
Frank- China doesn't need to "Militarily" destroy us, they own us. They could cause us great troubles with the stroke of a pen. Also, our economy is already destroyed and needs help.
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Permalink Reply by Frank Charly on
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So of course the way to improve our economy is to add a trillion dollars worth of new taxes and new expenses and a side issue of wiping out employer provided private health plans.Our guy is out to totally destroy the U.S. economy along with everything else that made this country great. The media talks about socialism but Pravda is more correct were on our way to Marxism. But I can assure you that the new politics will be sure there is plenty of cash available for the Chicago crack addicts.
But putting all that aside, common sense would say that gold is the best bet, if the criminals in the marketplace don't mess with it to their advantage.
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Permalink Reply by MinnesotaGuy on -
Um, China does not "own" us. Quit listening to the fear mongers and you'll be better off.
Lureuin said:Frank- China doesn't need to "Militarily" destroy us, they own us. They could cause us great troubles with the stroke of a pen. Also, our economy is already destroyed and needs help.
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Permalink Reply by Zyll on -
A pessimist is merely a better informed optimist. ;-)
MinnesotaGuy said:Um, China does not "own" us. Quit listening to the fear mongers and you'll be better off.
Lureuin said:Frank- China doesn't need to "Militarily" destroy us, they own us. They could cause us great troubles with the stroke of a pen. Also, our economy is already destroyed and needs help.
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Permalink Reply by Lureuin on
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MinnesotaGuy- I'm really well off because I understand what is happening around me. I don't listen to "fear mongers", I read the news and understand it.
Frank- It is a shame that we have to keep pumping paper into the system, but the alternative would have been even worse. I'm not taking sides, but the money printing started last September.
Zyll- Great quote!!! I think I'll use it in the future, with all royalties sent to you.
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Permalink Reply by george palmer on
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THE BANKER NEED THE PEOPLE WHO OWE THEM TO PAY OR THEY DON'T HAVE A BANK SO DO WHAT THEY WANT BUT THEY DO WANT THERE MONEY WE ALL KNOW THAT
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Permalink Reply by Lureuin on
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A little un-biased, non-political info just written today.
http://news.yahoo.com/s/ap/20090703/ap_on_go_ot/us_mountain_of_debt...
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