Gold has been flowing East for a decade. When the West wakes up to
the fact that their gold is gone, they will no longer have sound
money with which to back a currency. The world has only been off
a gold standard since 1971 and every currency collapse in history
has used precious metals to backstop the regimes new currency.
In the U.S. that will not be possible in the future, we have bet the
farm on fiat currency. Currency debasement has been tried time and
time again since civilisation started using money. It has failed every
time…perhaps this time it will work?
Want China Times
The People’s Bank of China, China’s central bank, is the world’s
biggest gold hoarder and the bane of Wall Street traders, reports
the Chinese-language financial news website BwChinese, citing a
Hong Kong financial analyst.
Leung Hai-ming told the portal that China’s central bank took
advantage of the US Federal Reserve’s quantitative easing program
in 2013, when the price of gold fell by 27%. The bank bought in over
1,000 tonnes of gold, representing almost one third of the world’s
3,756 tonnes last year.
There is reportedly less than 180,000 tonnes of gold reserves left,
and only 20% of that remaining gold is tradable. This means that
the People’s Bank of China will likely keep hold of the gold,
limiting the gold trading volume — a concern for both the US
government and Wall Street traders.
Leung said that the US Federal Reserve loans gold to investment banks
such as Goldman Sachs, Citibank, JPMorgan Chase, Morgan Stanley and
others every year to trade in the market. The amount of gold ranges
between 400-500 tonnes and the move acts to artificially suppress gold
prices. When the prices are in their favor, these investment banks buy
back the gold and return it to the Fed.
But this measure is absolutely useless because China’s is hoarding the
gold and does not follow the rules, Leung said. When it sees that gold
prices are going down, the first thing it does is buy them, and does
not sell when prices continue to fall. It seems that Wall Street cannot
do anything to counter China on this, according to Leung.
The analyst said that the People’s Bank of China is putting pressure on
Washington and Wall Street as the US dollar has been linked with gold
prices since its rise as the leading global currency. The Fed hopes to
manipulate gold prices in its favor, Leung said, but the Chinese central
bank is standing in its way.