Why China thinks gold is the buy of the century by Michael J. Kosares Let's start with some big, but digestible numbers: $3,950,000,000,000 = China’s total foreign exchange reserves $1,250,000,000,000 = Value of the world’s 31,866 metric tonnes gold reserve at $1220/troy ounce _________________________________________________________________________________________________________ $1,280,000,000,000. = China’s holdings of U.S. Treasuries in its foreign exchange reserves $ 319,000,000,000. = Value of U.S. 8133 metric tonnes gold reserve at $1220/troy ounce _________________________________________________________________________________________________________ Now let's delve into what those numbers might mean to the average gold owner... When it comes to the gold market, China is the dragon in the room. With its nearly $4 trillion in foreign exchange reserves and potential purchasing power, that presence is formidable. How formidable? Consider this: - China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves. - It could purchase the total global gold reserve (31,866 metric tonnes) with 32% of its foreign exchange reserves. - It could purchase all the gold stored by Exchange Traded Funds (+/- 1750 metric tonnes) with less than 2% of its foreign exchange reserves. - At $4900 per troy ounce, the value of U.S. gold reserves would match China’s U.S. Treasury holdings of roughly $1.28 trillion. - At $4700 per troy ounce, the value of the world’s gold reserves would match China’s total foreign exchange reserves of roughly $4 trillion. - To put it another way, China could pay double the current price for the world’s total gold reserve and still have nearly $1.5 trillion in foreign exchange reserves. - China sits atop the list of the world’s foreign exchange holdings. The United States ranks thirteenth at $133 billion. For the United States to ascend to the top of the rankings, it would need to revalue its $319 billion gold reserve to almost $4 trillion – or raise the value to just under $15,300 per troy ounce... There is quite a bit more. You may read the entirety of Michael's very interesting analysis here.
$3,950,000,000,000 = China’s total foreign exchange reserves $1,250,000,000,000 = Value of the world’s 31,866 metric tonnes gold reserve at $1220/troy ounce _________________________________________________________________________________________________________ $1,280,000,000,000. = China’s holdings of U.S. Treasuries in its foreign exchange reserves $ 319,000,000,000. = Value of U.S. 8133 metric tonnes gold reserve at $1220/troy ounce _________________________________________________________________________________________________________ Now let's delve into what those numbers might mean to the average gold owner... When it comes to the gold market, China is the dragon in the room. With its nearly $4 trillion in foreign exchange reserves and potential purchasing power, that presence is formidable. How formidable? Consider this: - China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves. - It could purchase the total global gold reserve (31,866 metric tonnes) with 32% of its foreign exchange reserves. - It could purchase all the gold stored by Exchange Traded Funds (+/- 1750 metric tonnes) with less than 2% of its foreign exchange reserves. - At $4900 per troy ounce, the value of U.S. gold reserves would match China’s U.S. Treasury holdings of roughly $1.28 trillion. - At $4700 per troy ounce, the value of the world’s gold reserves would match China’s total foreign exchange reserves of roughly $4 trillion. - To put it another way, China could pay double the current price for the world’s total gold reserve and still have nearly $1.5 trillion in foreign exchange reserves. - China sits atop the list of the world’s foreign exchange holdings. The United States ranks thirteenth at $133 billion. For the United States to ascend to the top of the rankings, it would need to revalue its $319 billion gold reserve to almost $4 trillion – or raise the value to just under $15,300 per troy ounce... There is quite a bit more. You may read the entirety of Michael's very interesting analysis here.
