You are here

Zero Hedge: How China imported all that gold without exploding the price

Section: Daily Dispatches

1:20p HKT Sunday, March 23, 2014

Dear Friend of GATA and Gold:

Zero Hedge has just outlined the scenario by which China and its many not terribly scrupulous entrepreneurs may have obtained huge volumes of gold while selling gold futures to prevent the price from taking off over the last year.

The mechanism for the undertaking, Zero Hedge writes, was commodity funding deals in which any particular lump of a commodity may have been essentially mortgaged a few times simultaneously -- sort of like the Western central bank gold leasing system in which any particular ounce of the metal may be subject to multiple ownership or possessor claims.

Zero Hedge writes: "... [o]f all speculated entities who may have been selling paper gold (since one can and does create naked short positions out of thin air), it was likely none other than China that was most responsible for the tumble in price in gold in 2013 -- a year in which China and its billionaire citizens also bought a record amount of physical gold (much of it for personal use, of course -- just check out those overflowing private gold vaults in Shanghai)."

Zero Hedge's thrilling conclusion: "When we previously contemplated what the end of funding deals (which the People's Bank of China and the China Politburo seem rather set on) may mean for the price of other commodities, we agreed with Goldman that it would be certainly negative. And yet in the case of gold, it just may be that even if China were to dump its physical to some willing third-party buyer, its inevitable cover of futures 'hedges' -- that is, buying gold in the paper market -- may not only offset the physical selling but send the price of gold back to levels seen at the end of 2012 when China's gold commodity funding deals really took off in earnest. In other words, from a purely mechanistic standpoint, the unwind of China's shadow banking system, while negative for all non-precious metals-based commodities, may be just the gift that all those patient gold (and silver) investors have been waiting for."

Zero Hedge's scenario is speculative and complicated but it's an argument for the suspicion, expressed early in these dispatches, that the attack on gold last April would not have been possible without China's assent and that, indeed, given its enormous foreign exchange surplus, nothing happens in any major market without China's assent.

The Zero Hedge commentary is headlined "How China Imported a Record $70 Billion in Physical Gold without Sending the Price Soaring" and it's posted here:

These financial people are really clever -- but apparently not quite clever enough to figure out how they might do the world any good rather than just themselves.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

Join GATA here:

Mines and Money Hong Kong
Hong Kong Convention and Exhibition Centre
Monday-Friday, March 24-28, 2014
Hong Kong Special Administrative Region, China

Porter Stansberry Natural Resources Conference
AT&T Performing Arts Center
Margot and Bill Winspear Opera House
2403 Flora St., Dallas, Texas
Saturday, May 31, 2014

Canadian Investor Conference 2014
Vancouver Convention Centre West
1055 Canada Place, Vancouver, British Columbia
Sunday and Monday, June 1 and 2, 2014

* * *

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:


How to profit with silver --
and which stocks to buy now

Future Money Trends is offering a special 16-page silver report with profiles of nine companies and technical analysis of their stock performance. Six of the companies have market capitalizations of less than $800 million and one company has a market cap of only $30 million. The most exciting of these companies will begin production in a few weeks and has a market cap of just $150 million.

Half of all proceeds from the sale of this report will be donated to the Gold Anti-Trust Action Committee to support its efforts exposing manipulation and fraud in the gold and silver markets.

To learn about this report, please visit: