MarketWatch/David Marsh/8-1-2016
“According to the IMF, which logs countries’ monthly gold holdings and reports them with a two-month lag, China bought monthly amounts of around 11 tons in January to April 2016, but kept bullion reserves unchanged in May. If China wishes to mount a genuine long-term challenge to American monetary dominance, it is conceivable that Beijing in coming years could mount a more spectacular action to close the gold gap with the largest holders, ether by taking more Chinese-controlled production into its reserves, or by arranging some form of large-scale gold purchase from international gold holders, private or official.”
MK note: Wanting to make a “large-scale gold purchase” is one thing. Finding a willing large-scale seller is something else again. As a net buyer of gold, China in a certain sense is already taking most of its internal production into reserves and Russia is on a similar course. The real reason it will take years for either of these countries to build reserves sufficient to their needs is because (a) willing sellers in size are few and far between, and (b) production from domestic mines is slow and painstaking. In the end, isn’t that what makes gold valuable and separates it from the production of fiat currency from the get-go? Obviously, the individual investor (and fund, by the way) with limited means, hence limited needs, stands a much better chance of diversifing his or her wealth than any nation state – and in the aggregate stands as a constant foil, day-to-day, week-to-week, month-to-month and year-to-year, to similarly motivated nation states.
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