China Is About to Shock the World

We are on the verge of a golden shock.

I wrote recently about plans by the International Monetary Fund (IMF) to include the Chinese currency as one of the reserve currencies that back the IMF’s so-called Special Drawing Rights.

Well, there’s another facet to that story that you need to know … and it echoes the warnings I first began voicing in early 2014.

As part of the IMF’s plan to bring the yuan into the basket of reserve currencies, IMF officials want Chinese authorities to provide an update on the quantity of gold squirreled away inside China’s vaults. That news, when it’s released, will be a wake-up call to the world. It will underscore the degree to which sovereign governments outside America value gold, and it will send the price of gold higher as global investors and savers comprehend the ramifications of the number China ultimately reports.

3,510 tons of gold.

That’s the estimate of China’s gold holdings that’s currently floating around the media. If that turns out to be the true figure, it would be more than three times the 1,054 tons of gold that China last reported officially in 2009.

That whisper number, I believe, is much too light.

Based on the quantity of gold China mines each year — it’s the world’s largest gold producer — and on the reported quantities of gold flowing into the country through Hong Kong and Switzerland, I calculate that China more realistically owns somewhere between 5,000 tons and possibly as much as 11,000 tons of gold.

Such a quantity would shock the world … because, primarily, it would raise enormous questions about where China collected all this gold.

China doesn’t mine enough to account for the spike. And the consumption of gold globally for jewelry and industrial uses takes up nearly 66% of global production, meaning that even if China bought every other ounce produced each year, that still would not account for the large increase in its holdings.

No, some of the gold in China’s vaults would have to come from a very large seller of gold … and the only large seller would be another central bank. (Which one — and you know which one I’m talking about — is a subject for another day.)

Instead, let’s stay focused on what China’s quantity of gold would mean to us directly…

China – Golden Protection

It would be a clear indication that China is establishing the yuan as a competitor to the dollar. Lots of Western commentators will laugh at that — a communist country with a reserve currency? They are so blinded by historical norms — the dollar’s reserve currency status for the last 70 years — that they fail to accept that history is ever-changing. The status quo is always in flux.

It would also be a clear indication that gold isn’t an archaic form of currency. It’s a very modern currency, one that serves a very real and useful purpose today as disaster insurance. It’s just that it’s a form of currency that government cannot manipulate, which explains why U.S. monetary officials routinely pan the metal as essentially useless.

The rest of the world doesn’t feel that way.

They see gold as the financial asset that it has been for thousands of years … which is why nations including Germany, Switzerland, Austria, Belgium, the Netherlands, France and others are repatriating (or looking to repatriate) their national gold held in the Federal Reserve and the Bank of England.

China’s report to the IMF, when it comes, will be the next big event to highlight the importance of holding gold today.

I say it all the time, but the message remains crucial to your financial well-being: Buy gold. Buy it often. Stash it away in whatever you deem the safe place (not a bank safe-deposit box). And sit patiently. The world is on the verge of a golden shock that will redefine global power … and likely send gold prices marching higher.

Until next time, stay Sovereign…

Jeff D. Opdyke
Editor, Profit Seeker

The post China Is About to Shock the World appeared first on The Sovereign Investor.

China Henry Paulson Dealing With China
  • cetude

    China eats dogs and cats. They need to feast on each other.

  • https://www.youtube.com/c/confusedinchina Confused in China

    Hey it’s Fred!

  • Zendi Zong

    Another one of your whites trashing about Asian overall. You proven the first time. The second time you just realized how dumb you look now. Lmao! Happy cheer!

  • Sal Yarima

    Comes from dealing with 1.2 billion people. Even in the USA with 300 million we are beginning to see how population affects the quality of life. In another 20 years in China, the population would slow down; life would be much much better. Meanwhile in the USA, the population would hit 400 million without a productive base. The service industries and financial industries cannot sustain such a large population in the US. The Chinese are on an upward path, we seem to be on a downward path. Perhaps the solution is taking our heads out of the sand and evaluating solutions. Internal solutions not attacking another country which does not help us in the long run.

  • Brainwashed@TECOL

    No. I’m sure you must have been told that in your politics brainwashing class before you all shout in unison that you’ll be “good”, ie stupid like Lei Feng.

  • Zendi Zong

    Don’t all White people from the West say that to all Asian anyways? Very classic racial comments indeed for all Asian.

  • Brainwashed@TECOL

    Terrible English skills…

  • Brainwashed@TECOL

    They are telling their banks to lower their reserve rates and pumping more money into the system every three months. Have you ever tried to deal with any service provider from Mainland China? “Sorry sir, your mortgage has yet to be approved because it’s nap time and the manager drank too much baijiu at lunchtime because he’s trying to keep his guanxi levels high and he’s scared a netizen might take a photo of him passing a hongbao.” Believe me, they’ve no hope of ever becoming a financial powerhouse. They’ve owned Hong Kong for nearly twenty years and they couldn’t even copy their simple banking model properly because all of the chinless wonder Bertie Wooster equivalents in China go into banking.
    Thankfully I’m a citizen of neither country.

  • Zendi Zong

    And the West are afraid of China leading for its fear. LOL!

  • Walter Libby

    I don’t get that gold thing, I mean you buy gold with fiat currencies. If it’s a hedge thing against economic collapse, it’s better to stockpile bullets and food. There is that, there also this

  • Sal Yarima

    You are confused. Look at the image of the USA outside of the continent. It is perfect no one tells you how difficult life really is in the USA today. It is hard hard hard. You are one paycheck away from living under the bridge. Is that life? Similarly, China has hidden problems but they have Gold and real money. China has the production base which used to exist in the USA. China is on firm ground. We are floating on hot air.

  • http://GoIntoGold.com GoIntoGold.com

    Gold bricks are fine, but I prefer down to feathers.

  • eponine

    Have you eaten already ???…..Im sure the Chinese already did….with not one but always a minimum of three viands.
    What else do you need…hip hop music.

  • Brainwashed@TECOL

    Why not bricks or feathers?

  • Brainwashed@TECOL

    They’re the masters of following. Never leading. Couldn’t lead a horse to water.

    Their idea of a great leader is an economically illiterate farmer pretending he’s a professor and starving everyone to death.

  • http://GoIntoGold.com GoIntoGold.com

    A lot of people may not be fully aware that you don’t need free cash at all to safely and easily invest in gold as well as silver – and I’m not talking about the worthless “paper” gold like with ETF’s, but the real thing, real physical gold only, as well as silver, and a few other of the major precious metals. I didn’t even learn about it myself until fairly recently. I’m talking about through simply diversifying of portion of one’s retirement accounts, in the form of an easy tax-free gold IRA rollover or 401K to gold IRA rollover. I believe it may even be possible to do so with a 403B as well. For those who do not know about it, this is one of the “best kept secrets” out there in terms of how to invest in gold, silver and these other precious metals eligible for this type of conversion. And one is not liquidating anything in a rollover, but merely doing just that – “rolling over” into a new gold IRA backed by stored real hard physical metal gold only, the way you would want – not paper. It’s pretty much the “best thing since sliced” bread in terms of how one can make a significant investment in gold and other precious metals in order to diversify in that way even when one doesn’t have the cash available to do so otherwise.

  • Brainwashed@TECOL

    I don’t understand what point you’re trying to make. Of course a third world country makes more cars than two first world ones. The price of labour is too high in Canada and the US.
    I am well aware of the US’s debt to China. It’s the equivalent of about 8% of the country’s total treasury bill yield, slightly less than the amount owed by the US to Japan.

  • Brainwashed@TECOL

    All facts, but you can’t even spell a simple preposition properly so what would you know?
    Imagine spelling “too” wrong!

  • al

    and have u been to Detroit lately?
    and do u know Mexico makes more vehicles than US and Canada combined?
    do u know US owes almost 6 TRILLION dollars to China?

  • al

    so far it’s the US who owes to China 5 (or 6?) TRILLION dollars, not the other way around.
    and one can’t compare incomparable and I mean yearly wages.
    it just doesn’t make sense at all!
    ever heard of a “purchasing power”?
    ever wonder how average Cuban worker can survive on $30 a month?
    or Sierra Leone dude on $30 a year?
    can You last one day on that much?
    thought so…

  • zackery bluball

    your tin foil hat is to tight buddy

  • zackery bluball

    thank you :) someone who gets what is going on

  • zackery bluball

    what is your point ? who cares what the Average citizen makes per month if the chinese government has been buying up massive amounts of gold then the MANIPULATION the central banks in AMERICA will stop and a TRUE price for gold will return right ? i mean wtf do you think india, russia, china, etc are hoarding gold for ?……. because the american dollar is full of promises and hot air !

  • eyecoin

    Why not store any in a safe deposit box? Or only not one in the US?

  • Gene

    Betting China reports upwards of 30,000 tons of gold. (and no Ft. Knox tungsten). It will shock the world.

  • Brainwashed@TECOL

    “on” Mars. Wumao fail.

  • Brainwashed@TECOL

    It needs to expand its welfare for purely pragmatic reasons too. I’ve been in queues of farmers at rural ATMs with their three wheeled trolleys parked outside. Some of these guys have 100,000 rmb + in multiple accounts. I know this is less than $20,000US, but the problem is that these figures have been saved over two or three generations, although they seem to be depositing more than 1000 rmb weekly which isn’t too bad if you consider how cheap it is to live in China if you’re prepared to live as they do. If a social safety net is implemented, people will feel more confident to purchase and take risks in business. All I see right now are loads of people taking wedding photos for exorbitant prices.
    Wedding photography is the number one business venture in China right now. That is retarded.

    It’s interesting how you mention output too. They spend much longer at work, but if you try to get anything done, it takes much longer. I swear it is more viable to employ an American again now that costs of labour have risen. An American clerical worker will get 4 times the tasks completed in an hour that her Chinese counterpart could due to the education system stripping almost all of them of critical thinking skills.

    I tried to send money to the USA and it took a Chinese mainland bank two hours and they still messed up the transaction. They also charged me a fee for returning it when they screwed it up. I now keep my funds and send them out of Hong Kong which takes a total of eight minutes at the ANZ bank in Kowloon. This Mainland bank thought they were so smart screwing me out of a transaction, but if they hadn’t they would have had repeat business and made more money. Lots of their business folk still can’t help themselves. Almost all of them are chinless wonders with more guanxi than braincells who feel the need to screw someone over to feel smart. It was funny because they produced a receipt from a foreign bank to show the money had been retrieved and sent back, but it was the wrong bank. They can’t even commit fraud properly! Yet it still doesn’t deter them from trying…

    Bullets propelled straight into the foot even after 37 years.

    The divergence between China as it’s portrayed in the media in the west and real China is the most beguiling thing I think I’ll experience in my lifetime. Something really bizarre has been going on. I think it must be geopolitical, but I’m not a conspiracy theory type. There has to be something making this weird country into an economic superpower, because it sure as hell isn’t market forces acting on their own.

  • ThatOneGuy

    That said though, lovely country if you leave the cities and check out the villages/towns. I especially recommend the Fujian province for its clean air and beautiful scenery. Also the food there is delicious and the wine is pretty good.

  • Brainwashed@TECOL

    Well said.

  • ThatOneGuy

    You do realize that China’s debt-to-GDP in the government and private companies is worse than the US right? China is using borrowed money and it has borrowed more than western countries (except maybe Greece). Also, if you take the GDP (economic output) of a country and divide by the population you get the economic contribution per person. The US and China have roughly the same GDP but China has 4x the population. So 1 Chinese Citizen = $11,000 per year to the economy. 1 US citizen = $44,000 per year to the economy. In other countries (in Europe) the number is even higher. Also, shouldn’t China be spending its money on other things? Like social security.

  • ThatOneGuy

    I have been in China for 6 months doing business and am about to go back to Seattle. Their economy is not viable in the long term. I see far too many empty apartment buildings with many, many, many more being built. I have been to malls and shopping centers that are completely abandoned. The average salary (I’m told by my Chinese friends) is around ~4000RMB, or ~$660 per month. Luxury goods are more expensive here than in the US, even if they are made in China. The people are nice but you can tell that development is new here, I have seen (multiple times in multiple places) grandparents having children use the bathroom on the sidewalk in broad daylight. If China becomes #1, it will be through sheer weight of population, literally, just ride the subway or bus in any major city during rush-hour, I promise you will puncture a lung. Add the aging demographic crises coupled with the duration of the one-child-policy, the government debt-to-GDP-ratio being worse than the US, then throw in the insane pollution (in Beijing I thought the air was trying to kill me), and you have the long-term viability of the Chinese economy.
    Also, considering the economic data that comes out of China, their report on the amount of gold they have is going to be BS. I would not be surprised if they rigged the scales then loaded them with 99% lead. I can’t believe people still think that a country who censors the internet, makes “patriotic tests” a requirement to be a teacher, and claims disputed territory because it is their “cultural heritage”, puts out accurate reports of its most important aspect (the economy). If nothing else though I hope it slaps our politicians in the face so they stop fighting each other and actually start making progress.

  • Sal Yarima

    How we think in the West today: If we bury our heads in the sand long enough China would explode and we will go back to being the world’s economic power. Our factories will automatically regenerate and produce items the world needs. Our citizens would get millions of high paying jobs and the world would respect us once more just like before. Reality is our factories are dead and gone, our currency is held up by bombs and trade tricks. The world hates us and only plays ball to avoid our backhand (using intelligence to ferment problems in each country of interest like Ukraine or Russia). Our one solution now is intelligence and propaganda after all Napoleon was a loser but he used propaganda to his advantage. Unfortunately the rest of the world has caught on to our propaganda and know how to avoid it. In a few words what is the status of the West today and the near future? Answer: WE ARE SCREWED!

  • Sal Yarima

    That should remind you of most Western countries in the early 1940s dont worry China would grow out of it. The first step is to destroy the IMF and World Bank. These two institutions have destroyed more countries and economies than World War one. The next stage is open up China for business without the cancer called the IMF.

  • Sal Yarima

    Actually most of that gold have been leveraged. In English, this means sold to Saudi Arabia, Japan etc. We sell the gold but keep it in our vaults claiming its safe. When crisis starts most of the gold would leave and we would still owe about 2,000 tonnes of gold we do not have. We are now debtors not only in Cash but also gold.

  • Sal Yarima

    More territory to expand into for China. Its good to have more and more farmland. They can become real estate or factories. Soon China would realize there is no more space to expand into dealing with Western countries. Not enough loans to float Western economies thus the only real area to expand into is the Chinese people. The Chinsese will demand quality and thus quality would come out of China. Westerners love to think of themselves as knowing the best or producing the best, best workers, most productive humans on the planet. That is good propaganda for the local population but it is not the truth. The truth is he who has money owns the playing field. The Western countries have lost the playing field as of 10 years ago.

  • Sal Yarima

    Are you paid by Western intelligence to “talk China to death?” because we have been getting that from everyone thus we need people who tell the truth. Money has no friends or enemies.


    not sour grapes….China is a cesspool of corruption, filth, copycats and idiots. If you live here you will understand the sick culture

  • stayneutral

    Brainwashed@TECOL, do you talk about a China in Mars? I worked and lived in China for 10 years. I have no idea what you are talking about.

  • Brainwashed@TECOL

    I haven’t even mentioned what happens if you go to a hospital with a sore throat. Shall I bring up the IVs of penicillin that are given to thousands of patients unnecessarily so that doctors can supplement their terrible incomes?
    China is destroying the immune systems of hundreds of millions of people because doing so makes money.

    Every year some new boondoggle projects are rolled out to keep migrant and local workers employed. Many of these projects are things like roller coasters and ferris wheels in the middle of nowhere which will need to be destroyed and eventually replaced by something that isn’t idiotic to build. GDP is chased by cadres in the provinces because high GDP figures are taken by the party as a sign of competence. I’ve seen entire rail networks unnecessarily rebuilt a few metres away from the existing ones because building a new bridge and digging a tunnel through a hill mean that growth is occurring.

    This happens because history is not studied properly in China. If you know anything about The Great Leap Forward, you’ll know that provincial cadres reported inflated grain figures because high grain quotas were the means by which governors’ promotions were calculated.

    Low quality growth is a polite way of saying “bulldozer mayor mentality”. People so shortsighted that they can’t see the forest for the trees, and certainly can’t grasp JS Mill’s simple concomitant variation argument because studying the humanities (or any subject beyond rote learning ABC and D multichoice categories) is considered a waste of time in China.

    I say it all and people are starting to listen.

    I wish it wasn’t true. I wish everyone in the world was prosperous and productive, but it isn’t the case. I hope you transition to a meritocracy so that the few comfortably fluent English speakers the country has can be better deployed in lucrative foreign trade jobs rather than as hack poster apologists for one of the most oppressive regimes in human history making 5 jiao per hit.

  • Scottie M.

    I live in China. I’m posting this on my China Mobile device using 4G right now from the glorious People’s Republic. Ask me anything

  • Lora De Allesio

    You are all confused Miky. Have another brusky and watch Batman.

  • Lora De Allesio

    Sour grapes

  • Lora De Allesio

    Sour grapes.

  • Brenda conatas

    I have seen their stores across the world cutting back as customers no longer want the Chinese junk and prefer to buy something with a bit more substance. I have watched chinese stores closeing one right after the other, Its still not there. In fact I hear more and more people concerned that these stores are fronts for Chinese soldiers who are keeping a keen eye on what is happening in the EU and learning the local ins and outs

  • William Gustilo

    Or their brains might have been contaminated consuming milk with melamine and inhalation of pollutants.

  • Brainwashed@TECOL

    Totally agree apart from the lovely country part.
    Many of the Shenzhen apartments are made from concrete which uses sea sand rather than river sand. There’s no home ownership, rather 70 year leases, but I’m sure from looking at houses all over the country, very few will last for 70 years.

    They’ll be rolling out the bulldozers to grow GDP in just 15 years, mark my words :-)

  • William Gustilo

    It is a hot air balloon filled with fake helium and is about to burst.. LOL

  • Fiberton

    I have friends who have lived in China most of their life. China is a hot air balloon. They have told me over and over Once you get west of Shenzen it is more and more farmers. Cities with just apartments owned but never lived in as the worth goes down. It is a lovely country but its economic data is pure BS.

  • William Gustilo

    Why, does truth hurts? Aren’t you glad that someone like Brainwashed@TECOL has the gall to expose the dirt and weaknesses of your country? Media propaganda by CCP is gaining momentum, but the posts and articles being published are dubious and questionable.

  • William Gustilo

    The author of this article must have been handsomely paid by CCP and the numbers of trolls are increasing. Money talks!

  • Amos

    As a chinese, I am glad you think about china this way and I sincerely hope you spread the word as much as you can

  • paulh

    US has about 8,000 tonnes of gold. gold reserves are not going to help much in a true panic. foreign exchange trading is about 4 trillion per day, so any major currency run would quickly deplete gold reserves.

  • Brainwashed@TECOL

    Or off of Mao’s sweaty decomposing balls.

  • Brainwashed@TECOL

    All except Bloomberg and the New York Times.

  • Brainwashed@TECOL

    Visit China and see for yourself. It hasn’t got anything, just empty residential housing, ghost malls and loads of people riding between them on electric bicycles interspersed with Italian and German luxury vehicles.

    Here’s a commonsense test, for every luxury car, there should be a quality business. China has ZERO quality businesses. Their IT companies are only lucrative to investors because of their ties to the government.

    If China simply opened itself up completely, all its industries would be flooded with foreign experts who would blow all the existing Chinese operators right out of the water.

    Education, energy, IT, banking, medicine, high end manufacturing, low end manufacturing, sales and marketing, publishing, you name it…

    I’ve no idea how this country ever became a superpower. Frankly, I think all these experts who talk it up are in on what must be the greatest ponzi scheme in the history of the world.

    Just try doing simple banking transactions in Mainland China. Something that takes 8 minutes in Hong Kong takes more than two hours in China and they still get it wrong.

    They might as well have a fault filled with sunflower seeds and tic tacs.

    If gold has any use, it merely serves to prove how retarded the 1% are and that there’s definitely still a distinction that can be drawn between aristocracy and plutocracy. If you’re doing well out of this economy, chances are you’re a bit special. Enjoy your nice trip to the seaside with the rest of the cashed up lemmings out there.

  • highlanderge

    i know it must be difficult for you Americans to accept the fact that China is kicking the US arce, best you accept it because it is a fact,.It must be hard for die hard patriots to accept it but it is a fact and it is something that should have happened long ago.

  • Laniakea

    I think There are almost 2 million metric tons of gold unregistered all over the world. our currencies are base on debt bond.

  • Pete

    “…. I calculate that China more realistically owns somewhere between 5,000 tons and possibly as much as 11,000 tons of gold.”

    There is nothing real to this statement you made. Where is your proof or are you just speculating off the top of your head?

  • garbo

    This is a wu Mao rag. I didn’t know China bought the western media.

  • Danny Ding

    Can anyone comment on why not to put gold in a “bank safe deposit box”
    And must it be actual physical gold. Why not just a gold account?

  • carter

    Anybody who trusts the numbers out of China must be licking the formaldehyde off their hardwood floors.

  • Mike King

    Why? One word: Re-hypothecation: The gold has been sold many times on paper, just like what happened in the 2008 CDO collapse.

  • Mike King

    Peter, are you masquerading as a liberal Jew? So smug about the recovery fostered by Obama’s magical beans you’ve become a brainwashed puppet.

  • Borgþór Jónsson

    It is not just China that has been buying gold.
    Russia and the countries in central Asia has also been buying gold in big quantities.
    Where does all that gold come from?

  • Borgþór Jónsson

    The Us foreign reserve is very small ,in fact tiny compared with the size of the economy
    US 119 billj.
    China 3000 billj
    Germany 176 billj
    Russia 356 billj

  • bart man

    I wonder why Germany doesnt just take the cash and buy it on the open market if hey want it so bad.

  • Al CrushU

    so it’s easy to call names but not so easy to explain why countries are repatriating gold from the u.s. I won’t hold my breath for an intelligent answer

  • kimo

    Here is the low down where all of the gold stored in the US.

    “A First Glance At US Official Gold Reserves Audits”


  • http://www.facebook.com/galarzacastaneda Jaime Galarza

    If you read well, you’ll find the author didn’t say 11 tons but 11000 tons.

  • kimo

    You need to wait for the updated report once China sends it in, before making any haste judgments. That’s what this article all about. Also the article mention about China buying up gold from a major central bank. I’ll give you a hint, China bought up their gold vault and all of the gold in it plus the building.


    Last full audit was 1953. Google it.

  • peter

    hahaha, you guys are something, either you are masquerading Chinaman or just real stupid.
    where did the Gold go? why was it needed to be used? NO one told about getting the gold for what reason? Idiots all, and China is truthful right? hahah

  • Mike King

    Wonder why we can’t give Germany back their 1,000 tons of gold for another 7 years?

  • Zendi Zong

    China is just following the ways of the Western influence.

  • David Goliath

    Is the world never understand that China is ruled by the same revolutionary communist government since the time of Mao?

    China has the sole right of its own based on the system of government they have. And here’s the world expecting China to follow a system that communist is fighting against.

  • occupywat

    specuclation is so logical…wat abt. russia/india/nth korea–do u know if they hoard more gold than usa ? guess some more v…

  • Dylan

    Some of this gold is belong to viet nam ?

  • Aaron Schmitz

    Oh and it hasn’t been inventoried since the 70’s, not the 50’s.

  • Aaron Schmitz

    11 tons of gold is pocket change compared to the amount of money the USA owes them.

  • Aaron Schmitz

    The USA has ZERO gold. Nobody has seen the gold in Ft. Knox since the 1970’s, that’s because it’s all gone.

  • Aaron Schmitz

    The IMF want’s to see China’s gold? How come they never want to see the USA’s gold?? Nobody has inventoried gold at Ft. Knox since the 70’s. Probably because it’s empty.

  • peter

    you are full of BS, just trying to sell the corrupts ones book and be a China cheerleader. You do not mention that USA has more gold than anyone and higher % of foreign reserves than anyone. Commie lover
    8,133.5 tonnes

    Percent of foreign reserves in gold:



    If China really has anywhere close to 11 tons of gold, verified by an IMF approved audit, it wound be an absolute disaster for the Fed, the dollar, and the USA. It would mean OUR Fort Knox gold, under the direct and exclusive control of the private Fed banksters even who’s NAME is really a lie, unaudited since the 1950’s(!) (why has the Fed steadfastly refused any audit?), is NOT THERE. It really would be the end of the financial world as we know it. It would reveal the greatest lie in our nation’s history.
    Are YOU ready?