Sunday, May 24, 2015

Important News Note: China sets up Largest Gold Fund

Here is a little news item that popped up on a Chinese media source that is important news. It talks about the Shanghai Gold Exchange setting a new $16 billion fund that will allow central banks to increase the holdings of gold reserves. Below I have pasted in this brief news article. Below that I have linked to Koos Jansen's review of this news.


"A gold sector fund involving countries along the ancient Silk Road has been set up in northwest China's Xi'an City during an ongoing forum on investment and trade this weekend.
The fund, led by Shanghai Gold Exchange (SGE), is expected to raise an estimated 100 billion yuan (16.1 billion U.S. Dollars) in three phases.
China is the world's largest gold producer, and also a major importer and consumer of gold. Among the 65 countries along the routes of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, there are numerous Asian countries identified as important reserve bases and consumers of gold.
About 60 countries have invested in the fund, which will in turn facilitate gold purchase for the central banks of member states to increase their holdings of the precious metal, according to the SGE.
"China does not have a big say in gold pricing because it accounts for a small share of international gold trade," said Tang Xisheng of the Industrial Fund Management Co. "Therefore, the Chinese government seeks to increase the influence of RMB in gold pricing by opening the domestic gold market to international investors."
According to Tang, the fund will invest in gold mining in countries along the Silk Road, which will increase exploration in countries such as Afghanistan and Kazakhstan."
Now here is the link to Koos Jansen's article on this with a few quotes pasted below the link.
Koos Jansen: China sets up Gold Fund for Central Banks (some quotes just below)

"Today we got a glimpse of what could be a global game changer, China is planning to launch “a 100 billion yuan fund led by the SGE, …which will in turn facilitate gold purchase for the central banks of member states to increase their holdings of the precious metal. This was just published by news outlet Xinhua in China mainland. Xinhua also published an important article in late 2013 in which it said, “it’s perhaps a good time for the befuddled world to start considering building a de-Americanized world… a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies… As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites”. It’s being thought these articles are written indirectly by the Chinese government. "

"It’s no secret it has been in the interest of the US to remove gold from the international monetary system to leverage their paper money power. Gold still is the US dollar hegemony’s Achilles heel. Is China now attacking the US by quickly strengthening ties with Asian and European countries through the Asian Infrastructure Investment Bank (AIIB), develop the new Silk Road and implementing gold as a financial center piece in these projects? We do know China has been buying A LOT of gold recently, has setup an international gold exchange (SGEI) – to trade gold in renminbi – and is likely setting up a new monetary system that includes gold."


My added comment:

This news seems to put China's intentions in a little different light. This looks much more like a direct attack on the US dollar than we have seen so far. It's always hard to tell what China is planning to do. Here we have this important news story being published by an officially sanctioned Chinese media outlet. This suggests the article is acceptable to the Chinese government. All we can do in regards to China is follow events and see what actually happens. 

In this case, it is obviously significant news when China sets up a $16 billion gold fund that will encourage 60 central banks to add more gold reserves. If we see this many central banks adding huge additional gold reserves like we know that China has been doing, we have to take notice of that news. Central banks don't make moves like this for no reason. 

It is a clear and obvious statement that there is concern over the stability of the present US dollar led fiat system in many parts of the world. There is no other way to interpret this that I can think of. Especially if you read the full Koos Jansen article linked above.

Added note 5-25-15: Rueters runs an article on this today.

Additional added note 5-25-15: This article provides a little more detail on this. This fund will invest in gold mining operations for the specific purpose of adding gold reserves to the 60 nations involved. China is clearly leading this effort. There can be no doubt that China has some kind of plan to use all this gold in the future. It will take awhile for all these nations to acquire actual gold from this fund since it has to be mined first. All this continues to suggest a long term Chinese plan that could take years to unfold, but will probably involve some big changes to the existing monetary system.

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