There were 46.2 tonnes of gold withdrawn from the Shanghai gold exchange in the latest week. Since 2009 there have been a total of 9,076 tonnes of gold withdrawn from Shanghai. I have also included two slides from a recent presentation by Zhang Bingnan, the Chairman of the China Gold Association. In them he talks about China gold reserves reaching 9816.3 tonnes at the end of 2014, the second largest in the world. Below that are two charts from a talk titled The World Needs New Reserve Currency from the perspective of global liquidity by Yao Yudong of the People’s Bank of China. In them he discusses the potential role of gold and the renminbi in international liquidity and as a new form of world reserve currency. Playing this kind of sea change is not the usual Wall Street task of getting tips from privileged cronies, and asymmetrical information in the equity markets, and playing against the rubes with the artificially manufactured market inefficiencies in which insiders excel. What will China do? And what will others do in response? From a practical standpoint it is not possible to forecast how and when any changes may come, and exactly what form they may take. This is a generational change in the character of international relationships and values. What is happening now has been happening since at least 1999. In this sort of change, almost everyone will be taken by surprise when the time comes. It is just that some will be in a better position for it than others.
