China’s Ministry of Industry and Information Technology has estimated that Chinese ANNUAL domestic gold demand will surpass 1,000 tons by the end of 2015.  Yes, you read that correctly.  China’s ANNUAL gold consumption is set to double in 3 years, to a pace that will see Chinese consume more gold annually that the total gold reserves of all but 6 nations in the world!

China’s Ministry of Industry and Information Technology announced that it expected Gold consumption in the country would be running at more than double national gold production by the end of 2015, more than double Chinese gold consumption forecast for 2012.

According to the MIIT statement, domestic demand is set to surpass 1000 tons by the end of 2015. It said this would ‘widen the fundamental market shortage’ and noted that the shortage of supply will persist in the coming few years as domestic gold supply ‘might only reach 450 tons by that time.

Official gold policy

The ministry promised: ‘In order to strengthen the gold industry the government will increase gold mine investment, speed up industry consolidation and international cooperation. It also said it would ‘develop gold trading platforms and investment variety (presumably meaning ETFs).

‘With regard to acceleration of industry consolidation, the government aims to lower the number of gold producers in the country to 600 companies by the end of 2015 from the current 700. And, the top 10 gold producers could be responsible for 260 tons of total output, up from 100 tons, by the end of 2015.’

ArabianMoney readers will not be too surprised to hear that China now has big plans for gold. Only recently we published the thoughts of ‘Mr. Gold’ Jim Sinclair who forecasts $3,500 an ounce gold and higher is coming on the back of Chinese demand.

China is looking to diversify its assets away from the US dollar and to protect its national savings against devaluation and inflation by investing in one currency that no central bank can print. Ironically the nation faces quite a challenge in achieving this because it cannot raise gold output anything like as fast as it would like.

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  1. We double down on the most destructive form of financial ineptitude with wild fire printing of FIAT currency, hollowing out our economy while exporting inflation to nearly every country.  China wisely doubles down and  doubles down again on Real Money   After the Western powers, aided by gold stealing allies like Japan, made off with well over 100,000 tons of gold China accumulated over the last 3,000 year, they are not going to let this happen again. 
    Their military, ships, nukes and eye to making the South China sea their own pond and defensible space, is not being developed to create forward bases.  It’s to protect themselves and make their country inpenetrable from their former and present foes.  This is a country with a strong memory that reaches over 5,000 years. And they do not appear to suffer from selective memory and collective amnesia, something that we engage in at a wholesale rate.  Those who forget their history forget their legacies and lose their country.
    China gold stocks could easily top 10,000 tons. While worth ‘only’ $700 billion or so, this accumulation will soon be sufficient to lay down the Yuan marker as an alternative currency.  If the rest of the Chinese ‘Golden Horde’ allies rally behind the Yuan, we will be faced with our own monetary existential problem.  This is the real USD currency collapse that so many wise minds talk about.  One day the light switch on the dollar will be turned off.  The inflation tsunami will be staggeringly large. All the conversations we’ve had about inflation and the dollar collapse will be spoken in the past tense.
    Whatever remaining dollar reservse held in China will be written off, just like the Greek Bonds going through their third haircut in 3 years.  In our case there won’t be the ECB, IMF and EFSF to bail us out.  IF there is, we will not like their terms.

    • I agree. China has NEVER been expansionist through its entire history. Its People spill out across the planet for that very reason. Their population grows like crazy and to ‘stretch out’ they have no choice but to emigrate. Still, wherever they end up, they integrate into the culture very amicably and more often than not become productive folks who enhance the society.

      In the end, I hope we all work out in our heads how terribly damaging ‘virtual’ trade media is. What I hope the Chinese, Indians and the Middle Eastern regional countries force on our goofballs-in-chief here in America and Europe, is a return to Honest Hard Money so that the world’s matrix of goods can flow according to interplay of supply-demand that can then be reasonably anticipated, settling into as much constancy as can be held to on average.

    • How many Hunt Brothers in S.E. Asia right now? I have seen Mike Maloney predict 60,000$ gold. I’ve seen Adrian Douglas predict 57,00 dollar gold. Both have said silver will go even higher. Many of the folks that have made these fabulous predictions have backed off to 2000$ 8000$ and 10000$ gold. They have backed off for some reason! I’m just a simple man and been fooled before. But I did my own research every tech. chart available and I have concluded that they should have never have backed off of their predictions! Gold will go to 60,000 dollars and more. Silver, it’s going to leave gold in the dust that it came from! Gold should be well over 60,000 Federal Plantation Scipts “FPS” right now!

    • China’s the largest gold producer and exports zero gold.  Keeps it all for herself.  China hasn’t released the size of her gold stores, but analysts put it more in the 3-4000 ton range.  If AG12K is correct 10,000 tonnes would be a shocker.  Russians are doing the same. 

      Rickards made the comment the other day you’ll know gold will go parabolic when countries use their money printing powers not to purchase debt but rather to buy gold.

    • Yep, I have pointed out on several previous posts that the reason China is buying so much gold is they must be planning to implement some type of gold backed currency.  Right now they’re getting everything setup as any country can now trade oil using their Yuan. 
      Also, no one says it must be backed 100%, even 20% backing would probably do the trick since that would allow them to issue $3.5 Trillion in current US Dollar value based off $700 billion worth of gold.  That’s enough to do a lot of international trades on any given day. 
      Then if they stop manipulating the price and gold goes to $3,500 an ounce or almost doubles.  That now means by using a 20% backed currency they could issue $7 Trillion in current US Dollar Value.  
      Those $7 Trillion gold backed Yuan now send that level of U.S. Dollars home creating havoc since they’re no longer needed in the international market place for trades. 
      Anyway, my 2 cents and guesstimate.

    • “What I hope the Chinese, Indians and the Middle Eastern regional countries force on our goofballs-in-chief here in America and Europe, is a return to Honest Hard Money so that the world’s matrix of goods can flow according to interplay of supply-demand that can then be reasonably anticipated, settling into as much constancy as can be held to on average.”

      Ah, but that kind of economics does not easily lend itself to corruption and manipulation, so it will be THE VERY LAST THING TRIED… and then only upon pain of total economic collapse if they do not revert to sound money.

    • China is also buying up gold mines all over the planet taking that production out of availability to the market. They won’t be selling it to anyone of they are going for a gold backed yaun.

    • China knows what real money is because it is part of the Asian cultures. To be more precise, all Asian countries know that gold and silver are money while most of the people in the Western countries think that gold and silver are only precious metals that are irrelevant today and fiat currencies have more values.

  2. “…they integrate into the culture very amicably and more often than not become productive folks who enhance the society.
                                                                                   –  –  –  –

    There Pat, I fixed it for you.

    • To be more precise, productive and “HONEST” people will say that their society in which they live with are unworthy. A lot of people use benefits given by the government which affect the productive and the honest people.

  3. China is buying gold & silver because its the last effective move before check mate! What else can they do? It’s the same for us. There are those that think communism just rose from the ashes and took over world overnight! Please! It was politics. Politics of the mafia!

    • China developed itself thanks to capitalism and not communism even if the Chinese government consider the country as a communist. If the USA does collapse due to China’s power growing up, then it would be karma for the USA for destroying the Soviet Union financially.

    • @Sumkid

      No country on Earth is presently Capitalist.

      Capitalism is a Social Order strictly founded on the tenets of Private Property and Individual Determinism.

      In that social construct, ONLY a free market economy is possible. China has a fairly ‘free market’ economy (though, in fact more Mercantilist, like all the others) but because its intrinsic Social Order has ALWAYS been structured on centralized control, it’s doomed to decline over time. America, on the other hand, is the original progenitor of the Capitalist ideal and a huge number of folks here are agitating for its pure  re-institution. If that happens, a re-play of the century post- 1790’s  will unfold to again make America the predominant economic focus in the World. THIS time, I pray The People don’t again allow themselves to become so preoccupied with commerce that they let ANY degree of corruption pass ANYwhere in our institutions.

  4. Ugly Dog  You got me to thinking that maybe China’s accumulation of gold was not so much a means to back their currency. It may have been a very elaborate and well crafted means to get the gold stolen in the last century back into the right hands.  In the retrospection of history, the chinese were the first with paper currency.  That experiment failed.  The Chinese seem to have a pretty good handle on history so with a little foresight, it would not take much to see how we, the US and western world were hell bent on debasing our currency and shredding our economic and manufacturing infrastructure.  The Chinese just stepped into the void created by our own foolish plans in trying to be the Empire that never failed. Hubris is a beast.

      Maybe in the initial stages of our currency debasement the Chinese saw a way of accepting our currency in trade for cheap chinese goods,  thus having a currency to manipulate and buy up  the western world’s gold stocks.  As the criminal nature of the western banks became more and more evident, the chinese also played into that hand.
     They are no slouches at corruption, easily sniffing  out our crime syndicates operating without rule of law over the last 10 years.
     How easy would it be for them to let us play right into their hands, incrementally removing the gold from the LBMA and other bullion banks just as soon as they found us with our hands caught in the proverbial cookie jar.  They are very intelligent people and know we continually underestimate the inscrutable Oriental.  That notion also played to their theme of letting us think we knew the score when, if reality, we knew nothing of their motives.  Even today we know little about their long term motives.
    They end up with the trifecta of economic and financial benefits.  Gold back in their vaults bought cheaply, a gold backed currency and the hobbling of a former economic foe.  With nukes and a blue water Navy, we won’t do anything to counter this.  If North Korea and Pakistan can straightarm us, the Chinese could easily defend themselves from our saber rattling.  The full roll out of their might could take another 5 years.  We have elected a government that will continue to play to their tune for another 4 years.

    A taste of this was the Geithnew reception in China. Laughter was the greeting. H Clinton was given short shrift when she visited. The Asian delegations got the red carpet. She got the used linoleum treatment.

    • Hubris is a beast.”

      Indeed it is… but, pay-back is a bi**h!

      A taste of this was the Geithnew reception in China. Laughter was the greeting.”

      Geithner was giving a speech before a large crowd of college students, made some truly stupid economic comments, and the crowd busted out in laughter that they simply could not contain.  Geithner looked really PO’d too.  How dare these students actually have the brains to know he was peeing down their legs and telling them that it was raining.  US students would have sucked it up without a glimmer of understanding.

      “H Clinton was given short shrift when she visited. The Asian delegations got the red carpet. She got the used linoleum treatment.”

      Well earned, well deserved!

    • @AGXIIK.   I follow your reasoning.  Remember back to Blythe’s orchestrated interview where she stated that the JPM short position was on behalf of a client.  We all assumed the client was the U.S. gov’t, but what if were really the Chinese as Jim Willie suggested.  We know the Chinese think long term.  What if the big short in the PM market is the Chinese with the goal to quietly accumulate all the physical gold and silver that they caN without running up the price.  They would be most willing to use soon to be worthless t-bills to hold down the paper price while they off-load the western bank physical gold to their vaults.

    • The Chinese do have a better handling of their previous problems in their history because they were present for about 4000 years while the USA existed for only about 250 years so they don’t have much experiences with problems.

    • We very well could be, Charlie.  Other than some ag products, coal, and nat gas we don’t seem to have a lot that they really want or need.

    • China has heavy land investments in the US. Farming, energy sector, mining, housing etc. They have what they want from us. Crippled manufacturing, in debt to them, they own a lot of resources here.

  5. That is a good point Ugly Dog. I hadn’t thought of the JPM element with China.  JPM is well hated by the other TBTF banks.  They have taken multi billion dollar losses with the London Whale and face equal losses in law suits.  Derivatives could endup destroying the banks.
    If they were to take the fight to  the other big banks  they may need a larger ally than the US government to watch their back.  It would not surprise me at all to find that JPM was part of the Chinese gold short scheme. If we know that China is the new player in the world economic game, JPM is way ahead of us on that recognition. As they work with the US gov to undermine this country, it would be very profitable for  JPM to play both ends against the middle, profit from trades on either side, like GS did with the AA subprime mortgage market, bet with the Chinese and help them get gold cheaply.The government does not control the banksters.  The banksters control and manage the government.  Obama is just another annoited politician set up to do the bidding of these folks.  He’s an even easier mook than the last mook.  He’s not that bright and his narcissism makes him a dupe.
      If gold goes up they could play on that side. JPM has a history of backing and bailing out the US Government and Treasury since the late 1800s.  They also pay against the US gov when it suits them.  Goldman Sach might be less likely to take these steps since there are so many squid drones in positions of high power in the US and Euro governments.  I don’t think they want to hurt or kill the hand that feeds them power.
    JPM might just see a Chinese gold Put? as a good bit of business when dealing with hundreds of billions in gold. Their  income statement needs a lot of help. Gold trading  profits generated by  handling these transactions would be very nice. Short or long, money is there for the making. If the US market is no longer a profitable place to play,  given the loss of large wholesale  and small retail accounts, the Chinese market could be a good hunting ground.  1,300,000,000 people make for lots of muppet power.

     If JPM could ‘conspire’ with the Chinese to help ‘loot’ the bullion vaults of large banks like HSBC and force the gold east, they stand to make some serious dinero plus curry favor with Jinping the new Chinese premier. Dimon’s visit to China this year was quiet but notice was taken. The 70 members of the last 10 year leadership elite made off with several hundreds of billions in loot.  The new government represents younger members of the same Dynasty, a very old family lineage that has ruled China for decades.  If JPM helps them bring more gold to China as well as assisting the elites in removing, say, half a trillion to cushion the days when this new group passes the leadership baton to another set of dynastic elites, JPM would be a friend at court.  JPM and Dimon are easily the most hated banker groups in the nation.  To the Chinese, the enemy of my enemy is my friend.  We will see how this plot works out.

    • “Derivatives could endup destroying the banks.”

      If only that were the extent of it, AG.  IMHO, the derivatives WILL implode one of these fine days and will destroy the entire world economy… and for who know how long?  When this happens, it will be an historic first.  🙁  

    • Then after the USA along with the other Western countries collapse, JP Morgan will screw China also with the same tricks that happened with the Americans in my opinion.

  6. If that’s the case, then I am sure that gold’s price will go up very high dramatically especially when China’s demand will surpass 1000 tons by 2015, gold ores are diminishing, the above ground gold’s supply is diminishing and due to inflation that is destroying the value of fiat currencies.

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