China's share of reserves in dollars dives
By Tom Orlick
The Wall Street Journal
Thursday, March 1, 2012
BEIJING -- China has made a sharp shift away from purchases of U.S. securities, slashing the dollar's share of the country's foreign reserves in what may signal a change in strategy for managing the massive cash pile, Dow Jones calculations indicate.
The portion of China's reserves parked in the U.S. appears to have sunk to a decade-low 54% as of end-June from 65% in 2010 and 74% in 2006, according to the Dow Jones calculations. The calculations are based on data on China's holdings of U.S. securities from an annual U.S. Treasury survey, and China's own data on the value of its foreign-exchange reserves.
The exact allocation of China's $3.2 trillion reserves -- by far the world's biggest war chest -- has always been a mystery. But the Treasury survey provides the best guide as to how much the State Administration of Foreign Exchange -- the organization charged with managing those reserves -- has invested in dollar assets.
... Dispatch continues below ...
Prophecy Coal (TSX: PCY) Wins Positive Feasibility Study
for the 600-MW Chandgana Power Plant in Mongolia
Company Press Release
January 17, 2012
VANCOUVER, British Columbia, Canada -- Prophecy Coal Corp. (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has received a positive feasibility study for the company's 600-megawatt Chandgana Mine-Mouth Power Project in central Mongolia. The report was independently prepared by Ralf Thomsen, project manager at Steag, a German firm specializing in the planning, financing, construction, and operation of highly efficient thermal power plants for fossil fuels.
The study covers technical specifications, deployment, and financial analysis of a 4x150-mw thermal power plant to be built adjacent to Prophecy's Chandgana Tal coal deposit, which contains 140 million tonnes of measured coal. Last year the power plant received a construction license and the coal deposit received a mining license. Engineering, procurement, and construction management selection and project financing discussion have begun and are expected to be concluded this year.
Construction is planned to start in April 2013, with the first 150-mw unit being commissioned in October 2015 and subsequent units to start in April 2016, October 2016, and April 2017. With proper maintenance the project will have 30 years of commercial operation.
For the complete statement from the company, including maps and charts, please visit:
Given the size of China's reserves, and the growing global importance of the world's second-biggest economy, Beijing's allocation of its reserves is both a key political issue and a potentially huge factor for foreign-exchange and sovereign-debt markets.
The U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June, but this equates to a much smaller share of the total, as China's reserves were growing rapidly during the period. The purchases of U.S. securities equaled just 15% of the growth in China's reserves, a substantial fall from 45% in 2010 and an average of 63% over the last five years.
Calculating the dollar's share in the allocation of flows into China's reserves is complicated by the impact of currency movements on the value of China's reserves. But even accounting for valuation effects, the downshift in dollar purchases appears pronounced.
The new numbers lend credibility to hints from Chinese and European government officials over the last two years that Beijing is ramping up its purchases of European sovereign debt. In February, speaking at the EU-China summit, Premier Wen Jiabao said, "Europe is a main investment destination for China to diversify its foreign-exchange reserves."
As the euro-zone crisis rumbles on, it suggests that funds from China's reserves could be a critical factor in keeping a lid on rising bond yields in the debt-ridden euro-zone periphery, and in funding Europe's bailout facilities.
Analysts caution that the U.S. data need to be taken with a grain of salt. The Treasury International Capital system collects data on millions of records to calculate foreign holdings of U.S. securities. But correcting for biases in the data, in particular correctly identifying country ownership of securities held in custody in third countries, is difficult. Typically the result of this bias is to underestimate China's holdings of Treasurys.
* * *
Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:
Or by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters
From a Company Press Release
November 22, 2011
VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.
"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."
Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.
For the company's complete press release, please visit: