Wall Street concerned over China’s gold hoarding
The
People’s Bank of China, China’s central bank, is the world’s biggest
gold hoarder and the bane of Wall Street traders, reports the
Chinese-language financial news website BwChinese, citing a Hong Kong
financial analyst.
Leung Hai-ming told the
portal that China’s central bank took advantage of the US Federal
Reserve’s quantitative easing program in 2013, when the price of gold
fell by 27%. The bank bought in over 1,000 tonnes of gold, representing
almost one third of the world’s 3,756 tonnes last year.
There
is reportedly less than 180,000 tonnes of gold reserves left, and only
20% of that remaining gold is tradable. This means that the People’s
Bank of China will likely keep hold of the gold, limiting the gold
trading volume — a concern for both the US government and Wall Street
traders.
Leung said that the US Federal
Reserve loans gold to investment banks such as Goldman Sachs, Citibank,
JPMorgan Chase, Morgan Stanley and others every year to trade in the
market. The amount of gold ranges between 400-500 tonnes and the move
acts to artificially suppress gold prices. When the prices are in their
favor, these investment banks buy back the gold and return it to the
Fed.
But this measure is absolutely useless
because China’s is hoarding the gold and does not follow the rules,
Leung said. When it sees that gold prices are going down, the first
thing it does is buy them, and does not sell when prices continue to
fall. It seems that Wall Street cannot do anything to counter China on
this, according to Leung.
The analyst said
that the People’s Bank of China is putting pressure on Washington and
Wall Street as the US dollar has been linked with gold prices since its
rise as the leading global currency. The Fed hopes to manipulate gold
prices in its favor, Leung said, but the Chinese central bank is
standing in its way.
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