Will China announce its new gold reserve position on April 24th?
Five years ago, at this time, China released information that it had increased its reserves by 600 tonnes, says Julian Phillips.
Posted: Monday , 10 Mar 2014
JOHANNESBURG (GoldForecaster) -
Gold Today – The New York gold price closed at $1,339.20 down $11.10 on Friday in New York. Asia saw it slip ahead of London’s opening to $1,332. The gold price was Fixed in London at $1,334.25 down $14.00. In the euro, it Fixed at €961.552 down €9.67 as the dollar stood at $1.3876 slightly stronger. Ahead of the opening in New York gold stood at $1,339.00 and in the euro at €965.11.
Silver Today – The silver price closed at $20.89 down 58 cents or over 2% in New York. Ahead of New York’s opening, it was trading lower at $20.98.
With a drop in Chinese exports of 18.1% two questions of importance to precious metal investors are, “is this a weather/holiday reflection that will change next month” or, “is it indicative of a global trade slowdown”. If the latter, we would expect to see more economic stimuli to stave off deflation. Such moves would be gold positive. The fact that these questions are necessary shows the ongoing uncertainty in the global economy. In the Eurozone such questions are more important because the threat of deflation is much more imminent.
The Yuan remains steady at lower levels today, confirming the management of the exchange rate by the monetary authorities in China. There is speculation that April 24th will see the announcement of the current level of Chinese gold reserves. Five years ago at this time China released information that it had increased its reserves by 600 tonnes. This was confirmation of the amount purchased by an outside agency on behalf of the People’s Bank of China over the previous five years. In the past we have stated that China will release these numbers then provided they are considered in the interest of China to do so. If not, then the announcement will be postponed. With the internationalization of the Yuan rushing towards us, many believe that the Yuan will appreciate tremendously. We do not subscribe to that as it would not be in their interests to let it do so. We see the Yuan being ‘encouraged’ down against the dollar or held at current levels. Right now China has a trade deficit. We do subscribe to the view that China has been acquiring a huge amount of gold for its reserves, an ongoing policy, as it recognizes the impact the move to a reserve currency will bring to the global monetary system. We also recognize that the government of China’s encouragement of its citizen’s to acquire gold may be based on the ease with which that gold could be taken from them for national strategic reasons. Other countries, almost inevitably would then follow that policy.
There were purchases of gold of 1.499 tonnes into the SPDR gold ETF [GLD] or Gold Trust, on Friday which left their respective holdings at 805.203 tonnes and 165.14 tonnes.
Silver – The silver price slipped 2% against gold’s slippage of less than 1% as silver waits for gold to break higher. This is unusual, as it discounts a fall in gold.