AsiaPac stocks are opening mixed after the US session gains. Perhaps the biggest news of the evening is, as China’s bankiong regulator has been meeting with foreign banks to express concerns over lack of risk control around non-performing loans. As CBRC said, rather stunningly honest for a government entity, “the current situation is more severe than the time in 2008 during the financial crisis.” With stocks up while commodities (Zinc) limit-down, PBOC injects another CNY50 bn and devalued the Yuan fix for the 2nd day in a row.…
When it comes to manipulating stock markets, there is the Western way in which central banks either directly, or – like in the US – indirectly, thanks to a very close relationship between the NY Fed and the world’s most levered hedge fund Citadel, documented here since 2010 – in which central bank trading desks end up buying index futures or merely use massively-sized orders to spoof the market higher (and very rarely lower), and then there is the Chinese way in which the local plunge protection team named the “National Team”, which has already spent around $300 billion to (ineffectively) halt the bursting of the Chinese stock bubble – buys individual stocks. Continue reading »
– China Increases Gold Holdings By 57% “In One Month” In First Official Update Since 2009 (ZeroHedge, July 17, 2015):
Back in April we wrote that “The Mystery Of China’s Gold Holdings Is Coming To An End” as a result of China willingness to add the Yuan to the IMF’s SDR currency basket which would require the disclosure of China’s gold holding ahead of an IMF meeting on SDR composition which may be held in October.
By way of background, the reason why everyone has been so focused on Chinese official gold holdings is that there has been no official update to the gold inventory of the world’s biggest nation, which have been fixed at 33.89 million oz since April 2009, a little over 1000 tons. In other words, the PBOC’s gold inventory has been “unchanged” for over 6 years which is in stark contrast to the ravenous buying of physical gold China has been engaging in for the past 5 years. Continue reading »
– China “Crosses Rubicon” With Stock Bailout; BofA Says PBoC Risks “Hurting Its Credibility” (ZeroHedge, July 5, 2015):
Earlier today in “Panic: China Central Bank Steps In To Bailout Stocks As Underwater Traders Pray For A Rebound,” we noted (without much surprise) that the PBoC has officially taken the plunge. Late on Sunday, the China Securities Regulatory Commission announced that China’s central bank is set to inject capital into China Securities Finance Corp which will in turn use the funds to help brokerages expand their businesses and reinvigorate stocks. Translation: China’s central bank is now underwriting brokers’ margin lending businesses. Continue reading »
– Meet The Relentless, Mystery Buyer Of Chinese Stocks Even As China’s Economy Grinds To A Crawl (ZeroHedge, March 16, 2015):
Unlike the late summer and early fall of 2014, when the rise in the Chinese stock market could be attributed to the PBOC’s PSL “QE Lite”, the relentless buying leg that started in mid-November has stunned most people, as nobody has been able to figure out just who is responsible for all this buying. Until now. According to Reuters, it is precisely China’s trust firms, with total assets of $2.2 trillion, and who together with Banker Acceptances comrpise the bulk of China’s shadow banking pipeline, are shifting more cash into frothy capital markets and over-the-counter (OTC) instruments instead of loans. In other words, instead of using their vast cash hoard of over $2 trillion to re-lend and stimulate China’s economy, China’s unregulated, shadow banking conduits are now directly buying stocks!
– The Final Nail In China’s Deflationary Coffin: Wages In The 4 Largest Cities Are Now Dropping (ZeroHedge, March 12, 2015):
Remember when during the inflation panic of 2011 we reportted that “Wage Inflation is Rampant In China As More Provinces Plan Minimum Salary Hikes.” and wrote:
By the end of 2010, 30 provincial-level regions had raised the standard for the minimum wage, with an average increase of 22.8 percent year-on-year., Yin Chengji, spokesman for the Ministry of Human Resources and Social Security (MHRSS), said Tuesday. According to him, 29 provinces have issued the guideline for the minimum wages, and the benchmark line grew about 2 percent. In Shanghai, the local minimum wage was the highest nationwide, totaling 1,120 yuan ($170.2) per month.”
And 2011 will be even worse: “Also, according to a China Business News (CBN) report Tuesday, in 2011, many areas would continue to raise the standard. A Xinhua News Agency report Wednesday revealed that northern Chinese city of Tianjin is considering raising the minimum working wage by 16 percent this year amid rising inflationary pressure and labor shortages.”
– China’s Latest Spinning Plate: 10 Trillion In Local Government Debt (ZeroHedge, March 11, 2015)
China is in the midst of attempting to help local governments refinance a mountain of debt, some of which was accumulated off balance sheet via shadow banking conduits at relatively high rates. According to UBS, “Chinese domestic media are saying that the authorities are considering a Chinese “QE” with the central bank funding the purchase of RMB 10 trillion in local government debt.”
– China Cuts Interest Rates, Takes Number Of Central Banks Easing In 2015 To 21 (ZeroHedge, Feb 28, 2015):
And then there were 21. Hours ago on Saturday, the country whose currency is largely pegged to the dollar which itself is now anticipating a rate hike in the coming months, surprised the world by confirming its economic slowdown yet again following a recent rate cut just this past November when it lowered its benchmark rate by 40 bps, after it again cut benchmark lending and deposit rates by 25 bps starting on March 1. Specifically, the PBOC will lower the one-year lending rate to 5.35% from 5.6% and its one-year deposit rate to 2.5% from 2.75%. It also said it would raise the maximum interest rate on bank deposits to 130% of the benchmark rate from 120%.
“Domestic media (Sina) reported that the PBOC conducted RMB 500bn of Standing Lending Facility operations with the big 5 commercial banks (ICBC, BOC, BoCOM, CCB, ABC). The reports note that the duration is 3 months and the RMB 500 bn is evenly split among the banks. This amount is roughly the same as a 50 bps cut to RRR for the whole banking system on a static basis. There is no official confirmation from the PBOC yet. Still, such an easing would be consistent with our expectation that (1) monetary policy will loosened amid the drastic slowdown in activity growth and falling inflation, and (2) full scale RRR and interest rate cuts are unlikely because they would be viewed as aggressive stimulus.”
In a worrying sense of deja-vu all over again, today’s rip higher reflects perfectly the US equity market’s knee-jerk reaction to the last ‘Stealth QE’ from China on July 28th. That did not end well as hot money flowed out to the instantaneously “easiest” central bank in the world…
From copper to high-yield credit and from stocks to bonds and gold, markets are reacting violently to the headlines from China that they are unleashing another 500bn Yuan “stealth QE”… everything is rallying.. except the USD (biggest drop since May).
– China Launches CNY500 Billion In “Stealth QE” (ZeroHedge, Sep 16, 2014):
It has been a while since the PBOC engaged in some “targeted” QE. So clearly following the biggest drop in the Shanghai Composite in 6 months after some abysmal Chinese economic and flow data in the past several days, it’s time for some more. From Bloomberg:
- CHINA’S PBOC STARTS 500B YUAN SLF TODAY, SINA.COM SAYS
- PBOC PROVIDES 500B YUAN LIQUIDITY TO CHINA’S TOP 5 BANKS: SINA
- PBOC PROVIDES 100B YUAN TO EACH BANK TODAY, TOMORROW WITH DURATION OF 3 MONTHS: SINA
Just as expected, the Chinese “derivative” currency, the AUD, goes vertical on the news, and the S&P 500 goes vertical alongside: Continue reading »
– By “Punishing” France, The US Just Accelerated The Demise Of The Dollar (ZeroHedge, July 4, 2014):
Not even we anticipated this particular “unintended consequence” as a result of the US multi-billion dollar fine on BNP (which France took very much to heart). Moments ago, in a lengthy interview given to French magazine Investir, none other than the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, said this stunner at the very end, via Bloomberg:
- NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR
Here is the full google translated segment:
Q. Doesn’t the role of the dollar as an international currency create systemic risk?
Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.
In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world’s reserve currency (for now), the US Dollar. Continue reading »
– China Has A Housing Bubble In “Some Cities”, PBOC Admits (ZeroHedge, May 23, 2014):
While US central bankers shudder at the idea of admitting their could be a bubble in real estate or stocks (unless its obvious in hindsight); and England’s Bank of England explains ‘if there is a bubble, it’s not their fault, but there isn’t so there’; it appears the Chinese are more comfortable with the truth. As Bloomberg BusinessWeek reports, China’s central bank Governor Zhou Xiaochuan said, China may have a housing bubble only in “some cities,” – an issue that’s difficult to resolve with a single nationwide policy. As concerns mount of dramatic over-supply on the back of extrapolated urbanization dreams, Zhou notes, “The economy has slowed down a bit, but not very much,” adding that “we should keep vigilance on whether it continues to slow down.” Which is odd because US talking heads have made up their minds that China is fixed…
– Bitcoin Tumbles After BTC China Halts Funding Amid Concerns PBOC About To Get Serious (ZeroHedge, April 27, 2014):
Bitcoin prices tumbled almost 15% as Chinese bitcoin exchange BTC China announced it has stopped accepting RMB deposits to user accounts from a major bank. As Coindesk reports, Management decided to proactively halt deposits from one of the country’s largest banks, China Merchants Bank, after the bank posted on its public website that it would no longer allow its customers to engage in bitcoin-related transactions, and said essentially it would require all such businesses to close their accounts. Withdrawals, of course, are allowed, but as Coindesk goes on to note, that while the PBOC’s ‘official’ policy on Bitcoin has not changed since December, this ‘pre-emptive’ move may suggest he PBOC would soon set stricter rules about how its earlier edicts should be followed.
– China Goes Dark: PBOC To Keep Goldbugs Clueless About Its Gold Buying Spree (ZeroHedge, April 21, 2014):
One of the more perplexing divergences that have plagued precious metal watchers and goldbugs when it comes to the great “black box” that is the world’s biggest buyer of gold in recent years – China (which overtook India after that particular country established unprecedented capital controls to block the import of gold) is that on one hand China has been allowing the outside world to glimpse its ravenous buying of gold through the Hong Kong-Shenzhen corridor (where nearly 70% of the Chinese gold jewellery business is located) since Hong Kong customs provides a full breakdown of how much gold it exports into China, yet on the other the PBOC has refused to update its official gold holdings in exactly five years.
– Forbes Pulls Down China Hoax Story; Even As Dennis Gartman Is Completely Fooled (ZeroHedge, Jan 27, 2013):
Earlier, we debunked an alarmist Forbes story about halted cash transfer by PBOC decree, which was erroneous along various lines all explained previously, not in the least that the actual announcement had first appeared some three weeks ago. And despite the kneejerk reaction of some of our more fatalist readers and not to mention the general public, the reality is that China has more than enough real problems (Trust Equals Gold being at the forefront) and certainly does not need to add imaginary, made up ones, conceived only with the intention of generating conflated ad revenues through click-baiting headlines. Which is why we commend Forbes for, better late than never, pulling the story even without providing an explanation of how this story appeared in the first place. Because where the article once was, there is only a 4-0-Forbes now:
Perhaps it is not too late for Forbes to salvage some credibility. Continue reading »
– The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next? (Economic Collapse, Jan 20, 2014):
Did you know that financial institutions all over the world are warning that we could see a “mega default” on a very prominent high-yield investment product in China on January 31st? We are being told that this could lead to a cascading collapse of the shadow banking system in China which could potentially result in “sky-high interest rates” and “a precipitous plunge in credit“. In other words, it could be a “Lehman Brothers moment” for Asia. And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well. Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion. That is an increase of $14 trillion in just a little bit more than 5 years. Much of that “hot money” has flowed into stocks, bonds and real estate in the United States. So what do you think is going to happen when that bubble collapses?
– Chart Of The Day: How China’s Stunning $15 Trillion In New Liquidity Blew Bernanke’s QE Out Of The Water (ZeroHedge, Nov 25, 2013):
Much has been said about the Fed’s attempt to stimulate inflation (instead of just the stock market) by injecting a record $2.5 trillion in reserves into the US banking system since the collapse of Lehman (the same goes for the ECB, BOE, BOJ, etc). Even more has been said about why this money has not been able to make its way into the broader economy, and instead of forcing inflation – at least as calculated by the BLS’ CPI calculation – to rise above 2% has, by monetizing a record amount of US debt issuance, merely succeeded in pushing capital markets to unseen risk levels as every single dollar of reserves has instead ended up as assets (and excess deposits as a matched liability) on bank balance sheets.
Much less has been said that of the roughly $2 trillion increase in US bank assets, $2.5 trillion of this has come from the Fed’s reserve injections as absent the Fed, US banks have delevered by just under half a trillion dollars in the past 5 years. Because after all, all QE really is, is an attempt to inject money into a deleveraging system and to offset the resulting deflationary effects. Naturally, the Fed would be delighted if instead of banks being addicted to its zero-cost liquidity, they would instead obtain the capital in the old-fashioned way: through private loans. However, since there is essentially no risk when chasing yield and return and allocating reserves to various markets (see JPM CIO and our prior explanation on this topic), whereas there is substantial risk of loss in issuing loans to consumers in an economy that is in a depressionary state when one peels away the propaganda and the curtain of the stock market, banks will always pick the former option when deciding how to allocated the Fed’s reserves, even if merely as initial margin on marginable securities.
However, what virtually nothing has been said about, is how China stacks up to the US banking system when one looks at the growth of total Chinese bank assets (on Bloomberg: CNAABTV Index) since the collapse of Lehman.
The answer, shown on the chart below, is nothing short of stunning.
Here is just the change in the past five years: Continue reading »
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– China’s Gold Reserves: Watch What They Do, Not What They Say (ZeroHedge, March 18, 2013):
Yi Gang, Vice Governor of the People’s Bank of China (PBOC), recently made the headlines with his comments on Chinese gold reserves. On Wednesday, Mr. Yi stated that China’s gold reserves remain static at 1,054 tonnes, and suggested that a sizeable increase in those reserves would be unlikely in the future. “We need to take into account both the stability of the market and gold prices,” Mr. Yi stated, adding that as the world’s largest gold producer and importer, China produces about 400 tonnes of gold annually, and imports an additional 500 to 600 tonnes of gold every year. “Compared with China’s 3.3-trillion-U.S.-dollar foreign exchange reserves, the size of the gold market is too small,” Yi said, rejecting speculation that China would further diversify its foreign reserve investments into the precious metal. “If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers … We can only invest about 1-2 percent of the foreign exchange reserves into gold because the market is too small,” Yi stated.
If Yi’s comments are to be believed, he is implying that the Chinese government has not added a single gold bar to its reserves since 2009 – which was the year the Chinese government officially announced its gold reserve increase to 1,054 tonnes. Given the production and import numbers stated above, we find that extremely hard to believe.
Mr. Yi’s comments stand in stark contrast to earlier comments made by Chinese government officials regarding the need to increase China’s gold reserves to ensure economic and financial safety, promote yuan globalization and act as a hedge against foreign-reserve depreciation. In 2009, a State Council advisor known as “Ji” said that a team of experts from Shanghai and Beijing had set up a task force to consider expanding China’s gold reserves. Ji was quoted as saying “we suggested that China’s gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years”.
– China Central Bank Says It Is “Fully Prepared For Looming Currency War” (ZeroHedge, March 2, 2013):
Just in case Lagarde (and everyone else except for the Germans, who have a very unpleasant habit of telling the truth), was lying about that whole “no currency war” thing, China is already one step ahead and is fully prepared to roll out its own FX army. According to China Times, “China is fully prepared for a looming currency war should it, though “avoidable,” really happen, said China’s central bank deputy governor Yi Gang late Friday.” We look forward to the female head of the IMF explaining how China is obviously confused and that it is not currency war when one crushes their currency to promote “economic goals.” Of course, that same organization may want to read “Zero Sum for Absolute Idiots” because in this globalized economy any attempt to promote demand (by an end consumer who has no incremental income and stagnant cash flow) through currency debasement has no impact when everyone does it. But then again, this is the IMF – the same organization that declared Europe fixed in 2009, 2010, 2011, 2012, 2013 and so on.
More on China’s FX troop deployments: Continue reading »
– Is the Gold Price Dependent on China? (Azizonomics, Jan 19, 2013):
China now buys more gold than the Western world:
Does that mean, as some commentators are suggesting, that future price growth for the gold price depends on China? That if the Chinese economy weakens and has a hard landing or a recession that gold will fall steeply?
There’s no doubt that the run-up that gold has experienced in recent years is associated with the rise in demand for gold from emerging markets and their central banks. And indeed, the BRIC central banks have been quite transparent about their gold acquisition and the reasons for it.
Zhang Jianhua of the People’s Bank of China said:
No asset is safe now. The only choice to hedge risks is to hold hard currency — gold.
Indeed, this trend recently led the Telegraph’s Ambrose Evans-Pritchard to declare that the world was on the road to “a new gold standard” — a tripartite reserve currency system of gold, dollars and euros:
– Deep Fried Black Swan Lands As China Admits It Has A Food Inflation Problem, Releases Corn, Rice From Reserves (ZeroHedge, Aug 13, 2012):
Last week we wrote an article that to many was anathema: namely an explanation why everyone is deluding themselves in their expectation that the PBOC would ease, soft, hard, or just right landing notwithstanding. The reason? The threat that food inflation is about to read its ugly head which is “Why The Fate Of The Global Equity Rally May Rest In The Hands Of Soybeans.” This was merely a continuation of our observations from a month ago that as a result of the Black Swan being “deep fried” in 2012, that the threat of food inflation will keep key BRIC central banks in check for a long time. As of today the threat has become fact, because as China Daily reports “China will release corn and rice from state reserves to help tame inflation and reduce imports as the worst US drought in half a century pushes corn prices to global records, creating fears of a world food crisis…The release may prompt Chinese importers to cancel shipments in the near term and take some pressure off international corn prices, which set a new all-time high on Friday as the US government slashed its estimate of the size of the crop in the world’s top grain exporter.” Sure, as every other short-termist measure the world over, it may help with prices in the short-term, but will merely expose China, and thus everyone, to the threat of a much greater price spike in the future. Because just as the strategic petroleum reserve release did nothing to help gas prices, nor the short selling ban in the US and Europe did anything to help the underlying broken financial system, so this will merely force the local population to scramble and ration whatever food they can get asap, now that the government has admitted there is, indeed, a food inflationary problem.
Bottom line – rationing is in full force, and given the continually declining state of the US corn crop, more will be needed,” said Christopher Narayanan, head of agricultural commodities research at Societe Generale. Continue reading »
– China’s Catastrophic Deleveraging Has Begun (Business Insider, July 15, 2012):
1. The frustrated and aggressive central bank
If one wants to know how bad the health of China’s economy has gone, look no further than the PBOC’s composure, which seems rather frustrated and aggressive as of late. On 5th July, the central bank cut benchmark interest rates for the 2nd time in less than a month. This happened right after the fact that in December 2011, PBOC cut the reserve requirement ratio(RRR) by a 50 bp to 21%, it followed up with another 50 bp in February and another 50 bp in May to 20% currently.
– Forget China’s Goal-Seeked GDP Tonight; This Is The Chart That Keeps The PBOC Up At Night (ZeroHedge, July 12, 2012):
As we wait anxiously for the not-too-hot and not-too-cold but just right GDP data from China this evening, we thought it instructive to get some sense of the reality in China. From both the property bubble perspective (as Stratfor’s analysis of the record high prices paid just this week for Beijing property – by an SOE no less – and its massive ‘microcosm’ insight into the bubbliciousness of the PBOC’s attempts to stave off the inevitable ‘landing’); to the rather shocking insight that Diapason Commodities’ Sean Corrigan offers that ‘Hot Money Flows’ have left China at a rates exceeding that during the worst of the Lehman crisis; take a range of key indicators – from electricity usage, to Shanghai container throughput, to nationwide rail freight ton-miles, to steel output – and you will notice that none of these shows a rate of growth during the second quarter of more than 4% from 2011, and some are as low as 1%. Whatever fictive GDP number we are presented with this week, the message is clear: “Brace! Brace! Brace!”
Via Sean Corrigan of Diapason Commodities,
Indeed, there are clear signs that some of these dangers are beginning to be realised. Taking the difference between the reported size of China’s forex reserves and the sum of trade and FDI inflows (and making some best-guess reckoning of the effects of reval changes and interest gains), one gets an estimate of hot money movements being diffused across the porous barrier of capital controls – most famously via the metals L/C rehypothecation scam. Between March’09 and February of this year, such ‘unexplained’ flows amounted to no less than $560 billion – roughly two-fifths of China’s total reserve accumulation and a third of its coincident increase in M1.
The last four months of increasing angst about the state of the ‘landing’ have seen a dramatic reversal of these flows, to the point that the discrepancy in the books suggests that China may have lost no less than $128 billion – a flight which exceeds that suffered during the worst of the Lehman crisis.
– Exclusive: U.S. lets China bypass Wall Street for Treasury orders (Reuters, May 21, 2012):
China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government, according to documents viewed by Reuters.
The relationship means the People’s Bank of China buys U.S. debt using a different method than any other central bank in the world.
The other central banks, including the Bank of Japan, which has a large appetite for Treasuries, place orders for U.S. debt with major Wall Street banks designated by the government as primary dealers. Those dealers then bid on their behalf at Treasury auctions.
They refuse to allow the yuan to strengthen because they know that once they do that it will mark the real end of the dollar era. So instead they are spending like crazy on infrastructure ahead of them allowing the dollar to plunge. Then the strong yuan will be employed to purchase all the commodities they need to utilize their infrastructure and the OECD gets priced out. To those that talk about yuan devaluation, you need to be specific. Devaluation versus what? Versus commodities generally along with other currencies? I can buy that argument very easily. Versus the dollar, highly doubtful. Why? The latest data says China owns $877.5 billion in U.S. treasuries. All they have to do is start dumping and the dollar is finished as the Fed will be forced to print so many dollars it will make Mugabe blush. People need to wake up.
(Mike Krieger, formerly a macro analyst at Bernstein, and currently running his own fund, KAM LP, summarizies the pretend reality we are all caught in now, knowing full well America is set on a crash course with reality at some point, yet sticking our collective heads in the sand, as the collapse will be some time in the “indefinite” future. In the meantime, banks will continue to boost US GDP by peddling “financial innovation” and restructuring advice to countries like Greece… and nothing else.)
Ready for the greatest financial collapse in world history?
This is the ‘Greatest Depression.
– China moves on currency after growing US pressure (Telegraph, April 14, 2012):
China took a major step closer to turning its yuan into a fully tradable global currency today, by doubling the range by which it is allowed to rise or fall against the dollar.
The People’s Bank of China said that from Monday it will double the trading band, so that the yuan can fluctuate by 1pc every day from a mid-point, compared with its previous limit of 0.5pc.
The move demonstrates Beijing’s belief that the yuan is now stable enough to handle major structural reforms, despite slowing growth of the Chinese economy.
Analysts said the slowdown may have actually spurred Beijing to make the change, because the Chinese government knew it could introduce the larger band without causing a spike in the yuan’s value.
– The Race To Debase In All Its Glory (ZeroHedge, Feb. 19, 2012):
Lest anyone forget what the real story is, here is a reminder. Thank you neo-Keynesian economics for making a mockery of non-scientific notation.
– Chinese Central Banker Declares That ‘Gold Is The Only Safe Haven Left’ (Business Insider, Dec. 27, 2011):
China is making an even bigger move toward gold in reaction to money printing around the world (via @JamesGRickards).People’s Bank of China official Zhang Jianhua declared yesterday: “No asset is safe now. The only choice to hedge risks is to hold hard currency – gold.“
Zhang, the bank’s research director, recommended buying the dips: “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation.”
China’s $3.2 trillion in foreign reserves are currently invested one-third in U.S. treasuries 20 percent in euro-denominated assets and only 1.8 percent in gold, according to China Daily. China has one of the world’s biggest gold reserves at 1,054 tons.