Chinese RMB - ``The World Currency`` - Gold will play a roleThese billboards are up at various strategic locations in Asia. There were put up by the Bank of China. The Bank of China is more than 70% owned by the People`s Republic of China (the Chinese government). As you can see, the Chinese are starting to be upfront with their intentions. And, gold will play a key role.
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The Renminbi (RMB) is a nickname for the Yuan (Chinese currency).
The Chinese have intentions for RMB to play in prominent role in the world in the future. They also want gold to play a key role in support of the RMB in the future. They must be getting close to turning on the switch, as these billboards sends a clear message of their intentions - they use to be covert, but now they are starting to be overt in certain situations.
They have been accumulating huge amounts of gold for at least 5 years now. They had also told the citizens of China to accumulate gold (a number of years ago, I think). China announced government gold holdings of 1,000 tonnes.
BUT, that was over 5 years ago. China is the largest gold producer in the world now, with about 400 tonnes per year. China keeps all gold ounces it produces. If we say 400 tonnes * 5 years then we get 2,000 tonnes of home produced ounces to add to the original 1,000 tonnes.
It is also estimated that China has been buying up many of the ounces that have come onto the market over the past several years, especially since the gold price was hammered down. Much of the western gold stockpiles (many leased out and are never coming back) and new gold produced elsewhere in the world have been going through the Swiss refiners over the last several years and shaped into size bars the Chinese like. It is believed that they have been gobbling up 1,000 - 2,000 tonnes of this international gold each year for the past several years.
There seems to be 3 primary paths for gold to flow into the Chinese vaults:
1) Mined in China (from Chinese mines)
2) Via Hong Kong
3) Via Shanghai
It`s impossible to know how many ounces of gold the Chinese government currently have stockpiled in the vaults. Basic logic would suggest somewhere between 5,000 and 10,000, but possibly higher.
As comparison, Germany would then have the 3rd highest stockpile, and they only have a bit over 3,000 tonnes (and some of that they can`t even seem to get back from the US).
The Chinese do not like sudden shocks to the market. I doubt they will announce their true total all at once. They might announce a little bit at a time - over a number of years. For example, they might announce, say, 2,000 tonnes this year - just as an example. That would double their official number, from 1,000, but it still would be far from a realistic figure.
If, by any chance they release the full Chinese gold inventory report - let`s say, 8,000 tonnes (again, as an exmaple) - everything will explode to the upside in the gold world.
ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB) This will eventually be a big rival to the US controlled IMF and World Bank and it will be one of the many factors behind the ultimate decline of US dollar demand. The AIIB is China`s new development bank and many of the key US allies are running to sign up to become founding members. The AIIB will be the key funding bank for development projects over the next 30 years, especially as Asia gets transformed by infrastructure spending over the next several decades. None of these countries want to be left out of opportunities, including the work contracts and borrowing options. China has already put $50 billion in the bank and expect to increase that to $100 billion in the next little while (and will continue to increase it as activity picks up). Even though Obama`s government told US partners to stay away from China`s new bank (``We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power``), none of the countries listened to him and his government. Here is a member list (which is growing each week):
AIIB Non-Regional Members: - Australia
- Austria
- Brazil
- Denmark
- France
- Germany
- Italy
- Luxembourg
- Netherlands
- New Zealand
- Spain
- Switzerland
- United Kingdom
Asian Regional Members: - Bangladesh
- Brunei
- Cambodia
- China
- Georgia
- Hong Kong
- India
- Indonesia
- Jordan
- Kazakhstan
- Kuwait
- Laos
- Malaysia
- Maldives
- Mongolia
- Myanmar
- Nepal
- Oman
- Pakistan
- Philippines
- Qator
- Russia
- Saudi Arabia
- Singapore
- South Korea
- Sri Lanka
- Tajikistan
- Thailand
- Turkey
- Uzkebistan
- Vietnam
In addition, Argentina, Belgium, Canada, Mexico, South Africa and Ukraine are all under consideration of joining the AIIB. Japan has also said they are considering the opportunity.