- Money Morning Australia

How Much Gold Does China Really Have?

Written on 11 February 2013 by MoneyMorning

How Much Gold Does China Really Have?

It’s amazing that no one is talking about this.

‘China’s demand is robust’ they’ll say. ‘China may overtake India as the top gold consumer’ they’ll add. ‘Exports rise year over year’ the chatter continues.

But no one, and I mean no one, in the mainstream is calling a spade a spade. China is hoarding gold at a rate never seen before – like modern day conquistadors. Only today, unlike in the time of the conquistadors, the blood trail is tough to follow, as are the shipfuls of gold.

It’s an egregious rake, though. And while the mainstream media fails to cover this huge story, we’ll do our best to figure out just how much gold China is holding

It all Comes Down to a Little Chinese Maths

Remember, the last ‘official’ announcement detailing China’s gold holdings was in 2009 – ringing in a total of 1,054 tonnes. Compared to their previous official holding, announced six years prior, the new total represented a dramatic 75% increase in Chinese gold holdings.

Much time has passed since the latest official announcement – and China’s gold holdings have surely risen higher. Indeed, a year ago, when we touched base on this topic, we ascertained that China was likely holding 3,300 tonnes of gold – that’s about three times the current ‘official’ holdings.

Flash forward to today and the strategic Middle Kingdom is surely holding even more gold.

Just take a look at their import patterns over the last 12 months…

As you can see, imports via Hong Kong have been off the charts lately. Indeed, last year set a record for imports to mainland china.

But that’s only part of the story. This morning I took the time to add up all the imports along with production stats to give us a clear idea of just how much gold China is holding behind the curtain.

Starting at the time of China’s last official announcement, we’d need to add another 2,873 tonnes to China’s ‘official’ holdings, just to account for imports and domestic production alone. That would put China’s current ‘known’ holdings at 3,927 – well above Germany as the second largest gold holding nation in the world.

And do you think Germany’s ears are starting to burn? You betcha! Why do you think we saw that news earlier this year that Germany is auditing its gold holdings and repatriating some of its gold held out of country? It’s all about the Chinese math!

But here’s the kicker.

When you start adding up the stealthy, hard-to-track sources of gold – black market gold from Africa and South America (and maybe Iran) exports, global gold mining from semi-national Chinese firms or buyouts, and the idea that China is urging their own citizens to hoard gold – you’ll notice that China’s gold hoard is closer to 7,000 tonnes, or more!

Take a look:

By my calculations China could be sitting on more than 7,000 tonnes of gold, today. A lot of which comes from ‘stealthy’ acquisitions that the mainstream won’t dare talk about: stealthy exporting, potential nationalization of the citizens gold, and gold transfers from mining buyouts, just to name a few.

Think of it this way. Right now the U.S. is tightening sanctions on Iranian oil exports.

There’s a huge thrust by the U.S. to curb monetary flows into Iran – so the U.S. has more than a few eggheads figuring this out, too. But even with all of the press coverage and government collaboration, do you really think Iranian oil exports are grinding to a halt?

I don’t. Sure the ‘official’ exports are heading lower – but on the back end of that there is a massive amount of Iranian oil hitting the market.

China’s Hungry for Gold

Now let’s switch back to our discussion on China. There aren’t any sanctions on China’s gold imports, nor do we have any government agencies or global-collaborations attempting to stop China’s gold moves.

That said, if Iran can export oil when we don’t want them to, just imagine what kind of show China is putting on behind the scenes without a peep from the U.S. government! The amount of under-the-radar gold coming from Africa and South America has the potential to be enormous.

Frankly, name any country in Africa – with gold in the ground – and I bet you there are Chinese nationals on the ground digging or, at minimum, setting the ground work for black-market trade agreements.

On that end, you could fit enough bullion into a dingy to shift the global market for gold. But I’ll be the first to tell you the Chinese aren’t showing up to Africa’s gold-holding nations in a dingy – instead, they’re stopping by with cargo ships. Lots of em.

Ha, and here’s another little anecdote for you…

A few years back I sold my old car. In the process I had a lot of ‘colorful’ characters show up at my house. They’d try to lowball me or pose a ‘trade’ for my car (man, the kind of people that you find on the internet these days!) But when it was all said and done I ended up selling my beat-up, 13-year old car to the highest bidder. He was happy to pay for it, too.

After we did some paperwork I asked him if it was for him or his family, he casually said ‘nope’.

‘I’ll be shipping this car via cargo ship to Africa, there’s a huge market for old cars there and this is one of the top selling models’ he said. Forget selling the old car to a high-schooler, my car was headed overseas!

What’s this got to do with the whole China gold debate?

Well, believe it or not the developing world in Africa wants to keep developing. Whether they get old cars from the U.S. or cheap goods from China they are willing to pay good money (or good gold) for imports.

And China is at no lack for tradable merchandise – just check your local dollar store.

I’m shaking my head as I type right now. Just imagine a cargo ship filled with what’s essentially five, dollar stores-worth of merchandise – plastic soccer balls, wanna-be Barbie dolls, cheap tool sets, you name it.

When that ship shows up on the shores of an emerging African nation and empties its cargo (to the happy locals), there’s NO WAY that boat is going back to China empty. More and more I bet it’s filled up with local resources that China craves – one of which is surely GOLD.

Ignore China’s Poker Face

So you see, China is getting far more gold than it’s leading on – I bet there are thousands of tonnes that are unaccounted for. Heck, officially China says it hasn’t added an ounce of gold to its holdings for almost four years! That’s laughable. And it’s also profitable to those that see the writing on the wall.

So add it all up. China is the world’s leading gold producer and also the world’s leading gold importer. And surprisingly their official gold holdings haven’t risen an ounce in over three years.

It’s like the annoying guy at the poker table that hides his casino chips in his lap, waiting to pounce. But unlike a game of poker, the stakes are much higher in the global currency market.

Better start studying your Chinese math. After all, how much gold you have?

Matt Insley
Contributing Writer, Money Morning

From the Archives…

Two Questions to Ask Before You Buy Another Stock
8-02-2013 – Kris Sayce

Are These 5 Blue-Chip Stocks Still a Good Buy?
7-02-2013 – Kris Sayce

Don’t be Long and Wrong on this Stock Market Rally
6-02-2013 – Kris Sayce

Perceptions of Beauty and Stock Valuations
5-02-2013 – Satyajit Das

This Share Market Rally Has Angered Some Investors
4-02-2013 – Kris Sayce

Already a subscriber to Money Morning... or simply, just like what you're reading? Then show your support and spread the word...
Share this post on...

At Money Morning our aim is simple: to give you intelligent and enjoyable commentary on the most important stock market news and financial information of the day - and tell you how to profit from it. We know the best investments are often the hardest to find. So that's why we sift through mountains of reporting, research and data on your behalf, to present you with only the worthwhile opportunities to invest in. Become a more informed, enlightened and profitable investor today - by taking out your free subscription to Money Morning now.

Leave a Comment

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.

If you would prefer to email the editor, you can do so by sending an email to moneymorning@moneymorning.com.au

GET THIS NEW REPORT : 5 Things You Can Do To Boost Your Retirement Pot

In this report we’ll give you strategies, tips and advice to help you kick-start, or revive your retirement savings right now.

PLUS you'll get Money Morning every weekday...absolutely free.

Enter your email address below and hit the 'Claim My Free Report' button now.

Privacy Statement
We will collect and handle your personal information in accordance with our Privacy Policy.
You can cancel your subscription at any time

Diggers and Drillers

A 3-Point Plan to Re-Engage with the Aussie Mining Boom

This new video reveals a way for Aussie share investors like you to RE-ENGAGE with the next phase of the mining boom…while valuations are still dirt-cheap…

The plan centres round three specific stocks.

To find out what they are, click here.

Australian Small-Cap Investigator

The Australian wildcatter
exploring oil's 'final frontier'

The US Geological Survey says this area contains up to 71 billion barrels of oil.

Only a few explorers have secured licences to drill.

One of them is a daring little Aussie firm that begins drilling 'in early 2014'.

According to small-cap analysts Tim Dohrmann it's impossible to speculate just how high this one could go. Find out why here.

World War D

Couldn’t make it to our
‘War Summit’?

Don’t sweat it. Click here for the next best thing…

World War D was the most important meeting of minds of the decade so far. What came out of it will almost certainly force you to reshape your investment plan for the rest of the decade. There's no way to go back in time and get inside the Savoy Ballroom of the Grand Hyatt.

But you can do the next best thing…
to find out what it is, click here.

  • ^NDX3534.532+1.446 - +0.04%
  • ^FTSE6625.25+41.08 - +0.62%
  • ^AORD5444.800+32.200 - +0.59%
  • ^AXJO5454.200+33.900 - +0.63%
  • AUDUSD=X0.933
  • USDJPY=X102.445

Graphic Ad 1 – Blue Chip Stocks Report

Revolutionary Tech Investor

This report is about TECH MOON-SHOTS

Four of them, to be precise.

It's an early-days project. But one biotech aiming for the cancer moon-shot is already up - get this - 497.14% since tipped.

For four more tech moon-shots, click here.

Gowdie Family Wealth

The worst mistake you can make when handing wealth on to your kids

This brand new investor briefing shows you what your family’s in for if you don’t take care to leave your wealth to them in exactly the right way.

And it shows you precisely how to prevent infighting, recklessness and misunderstanding over money.

Read it here.

The Money For Life Letter

Holden. Toyota. Qantas. BUST

Do you really expect the share market to boom in times like these? That's why Nick Hubble says the best thing you can do right now is invest for safety and income.

This brand new video shows you how you can get predictable, reliable and rock solid cash flow no matter what happens in the wider economy.

You could lock in up to $20,000 a year - and that's just the start. See how here.

Sound Money. Sound Investments. [bullish prediction]

Greg Canavan's first bullish prediction in four years

Greg Canavan
doesn't make forecasts like this often.

When he does, it's because he’s found something that could make you money for years to come.

Read more here.

Is the Australian Housing Boom Really Back?

The Denning Report

2014 Predicted

Dan Denning accurately forecast 2013's flight from
bonds to stocks, the commodities crash and the
Aussie dollar top…to the exact week

In this brand new forecast report, he shares his
three critical predictions for 2014…

More Recommended Reading Below...

The Pursuit of Happiness & The Daily Reckoning

  • The Pursuit of Happiness
  • The Daily Reckoning Australia

Done properly, a retirement business can not only help fill a retiree’s time and replace their work [Read More...]

Free speech is no longer really a right at all. Governments, vested interests, and lobby groups are [Read More...]

Australian house prices are going to remain high. Perhaps finally, when the last baby boomer retires [Read More...]

Make sure that the changes you make to your financial plan are from a credible source. Otherwise the [Read More...]

It was day two of the World War D conference, and the final session was starting. We were closing th [Read More...]

Since the US Federal Reserve’s relief efforts began, total world debt has gone up by $30 trillion, w [Read More...]

A one size fits all strategy or rollover to your own self managed super fund with the ability to tai [Read More...]

Services will boom according to the Reserve Bank of Australia. Sales assistants and tour guides are [Read More...]

In the many years since the creation of the US Federal Reserve System as America's central bank [Read More...]

In business, as in other things, we are being roughened up… and toughened up. We promised a grim acc [Read More...]


"I think you're fantastic! I love to read what you write...you're so interesting and amusing and I've learned so much" -
Money Morning reader, Chris Gadd

"You guys are brilliant. I feel more relaxed about the future than ever simply because I know what is going on rather than floundering around with smoke screens and mirrors from the government and mainstream" -
Money Morning reader, Helen Carter

"Wow what can I say? I was an economically confused moron until I read your newsletter and even though I've been a subscriber for a short period I can now see how easy it is to understand, if you use common sense and can have the spin translated into everyday language. Thanks for an entertaining read." -
Money Morning reader, John

"Keep up the good independent and well thought out articles offering a view that often debunks mainstream myths." -
Money Morning reader, Craig

"I do admire your straight talking and simple analysis of the situation, I think of you as the Jeremy Clarkson of finance." -
Money Morning reader, Jeffery