[Voice of Hope November 15, 2023](Comprehensive report by our reporter He Jingtian) Although the Xi Jinping meeting has been held in San Francisco, California, the CCP has also released a conciliatory tone. In fact, the CCP has always been wary of the United States and strategically still regards the United States as a long-term enemy. Today there are media reports that some gold analysts said that the gold reserves held by the CCP are much higher than the CCP’s official data, and may be more than twice the U.S. gold reserves. Once the CCP releases this data, it will be tantamount to declaring war on the United States.
Analyst: China’s gold reserves may be much higher than those of the United States
Hong Kong FX168 Finance reported on November 15 that Dominic Frisby, a gold analyst and founder of Flying Frisby, said that the gold holdings officially disclosed by the Chinese Communist Party are far from the reality. He said that the CCP is secretly acquiring a large amount of gold, and its holdings have exceeded twice that of the United States.
The latest official data from the Chinese Communist Party shows that the central bank purchased gold for the 12th consecutive month in October. According to the World Gold Council, China produced 375 tons of gold in 2022, but in the first nine months of 2023, its state banks purchased 181 tons of gold, compared with a total of 800 tons purchased by global central banks. Ton.
Data show that as of July this year, the CCP’s gold reserves were estimated at 2,113 tons, and it recently purchased about 23 tons of gold, increasing its total gold holdings to 2,215 tons, second only to the Federal Reserve’s 8,133 tons. Overall, the Chinese government has recently become one of the largest gold hoarders.
Frisbie told Kitco News that China’s gold accumulation is the largest in the world, but the actual numbers are more important.
Frisby believes that the CCP is ambitious and its official announcement is not that arrogant. In fact, its gold holdings may be 10 times what it publicly announced.
Frisby said that China is the world’s largest gold producer and gold importer. More than 50% of its gold mining is state-owned, and the gold produced in the country is not allowed to be exported. It can be said that all the gold mined by China remains in the country. .
Frisby believes that while it is not clear how much gold China imports through Switzerland, Dubai or London, the market can make some estimates.
He said, “We know that a large amount of gold entering China goes through the Shanghai Gold Exchange. We also know that since this century, the Shanghai Gold Exchange has withdrawn 22,000 tons of gold.”
Frisbie estimates that the CCP holds at least 33,000 tons of gold, half of which may be state-owned.
Frisbie pointed out, “16,500 tons is twice that of the United States. If China (Chinese Communist Party) turns to the United States and says, we get twice as much gold as you, that is equivalent to a declaration of war.”
He said, “If geopolitical tensions between the United States and China intensify, China (the CCP) will weaponize gold. In order to make up for the shortage of foreign exchange, the CCP may be considering using gold to support the RMB.”
Dealing with US sanctions?
Data released by the State Administration of Foreign Exchange of the Communist Party of China on November 7 showed that as of the end of October 2023, the scale of foreign exchange reserves was US$3.1012 billion, a decrease of US$13.8 billion or 0.44% from the end of September.
On the same day, the State Administration of Foreign Exchange of the Communist Party of China announced that gold reserves at the end of October stood at 71.2 million ounces (approximately 2214.57 tons), an increase of 740,000 ounces (approximately 23.02 tons) from the previous month. This is the twelfth consecutive month of increase in the CCP’s gold reserves.
The CCP sells off U.S. debt while increasing its gold reserves. This operation has attracted attention from the outside world.
Nikkei reported that China has suffered massive capital outflows due to slowing economic growth and debt concerns. Estimates from Goldman Sachs in the United States show that outflows in September reached US$75 billion, the highest level since 2016. The depreciation of the RMB puts great pressure on selling.
According to reports, in October this year, the RMB was near 7.3 yuan per U.S. dollar, a low since 2007. Foreign exchange traders at multiple foreign banks confirmed that “Chinese state-owned banks appear to be selling dollars around National Day.”
Japanese media reported that this is reminiscent of the Chinese Communist Party’s monetary authorities instructing state-owned banks to sell U.S. dollars and buy RMB in order to curb the depreciation of the RMB, while the banks sold U.S. Treasury bonds to ensure funds.
According to Reuters analysis, official researchers from the Chinese Communist Party studied Western countries’ reactions to the Russia-Ukraine war and speculated that if a conflict breaks out in the Taiwan Strait, the CCP will face severe U.S. sanctions and should try to create a global corporate network, seize U.S. assets within its borders, and Issue gold-denominated bonds.
Reuters found that after the outbreak of the Russia-Ukraine war, more than US$300 billion in foreign exchange assets of the Russian Central Bank were frozen and Russian banks were expelled from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) interbank payment system. This particularly worried CCP experts because the CCP owns It has more than 3 trillion US dollars in foreign exchange reserves and is also an export-oriented economy.
Chinese Communist Party scholars propose solutions to the problem of over-reliance on the U.S. dollar. Sun Xiaotao, a scholar at the China Center for International Economic Exchanges (CCIEE), published an article in February this year stating that gold-denominated trade should be promoted to prevent violent fluctuations in the renminbi.
Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics and an expert on China’s economic issues, told Newsweek that the CCP’s large purchases of gold “may be a diversification strategy.” , possibly to reduce its vulnerability to any potential sanctions that the United States might impose on China’s financial system.”
He also said that promoting the yuan to become an international currency is definitely a long-term goal of the Chinese Communist Party. It hopes to weaken the role of the US dollar, diversify official foreign exchange reserves and reduce US dollar reserves, which seems logical.
However, in addition to supporting the CCP’s financial crisis and coping with a potential diplomatic crisis with the United States, it does not seem to be the only potential reason for the CCP’s large-scale gold acquisition.
Julian Jessop, an economist and researcher at the Institute of Economic Affairs, said, “Some people believe that this is a political game to push up U.S. interest rates and damage the U.S. economy. But it would also hurt China, which remains a large holder of U.S. government bonds and would also suffer significant losses.”
That said, while China may be buying gold to protect its position from geopolitical risks, the Chinese economy still relies on U.S. government assets (Treasury bonds) to maintain a surplus.
Michael Pettis, professor of finance at Peking University Guanghua School of Management, Pettis said, “China (the CCP) may be buying gold to reduce its exposure to the U.S. dollar and thereby reduce the risk of possible sanctions, but the scale is still Very small.”
Editor in charge: Lin Li
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Tags: data CCP attracts attention Experts public equivalent declaration war United States Chinese economy Gold reserves Foreign exchange reserves CCP official data Declaration war United States Gold RMB Selling #U.S debt Depreciation Capital outflows-