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IMF urged to sell gold to battle cash crunch

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  • #31
    Re: IMF urged to sell gold to battle cash crunch

    Originally posted by Tet
    I see nothing that you say that disputes my statement, if anything it shows the amount of gold in realtionship to China's Foreign reserves has gone down every year. China held $470 billion in foreign reserves in 2004, that represented 2% of it being gold. Today China holds over $1 trillion in reserves and dispite gold's rise in price over those 2-years the percentage of gold to foreign reserves is lower. I try to point out that China steps in to help with the Asian meltdown of Hong Kong to show this could very well represent China's 1999 purchases and you sidestep this statement. Hong Kong being a former colony of the Bank of England it would be hard to untangle all the gold holdings of Hong Kong. Sovereignty was transfered in 1997 and the following year the meltdown starts.

    Maybe we have a different view of collecting, because to me that means you have more of something not less. I'm sure your comments about Chartalism will be just as enlightening.

    I finally see what you're driving at with those small minded semantic and misdirection offerings, since it's the only way to show there's even a glimmer of having made a correct statement.

    Of course "bought" and "collecting" have two entirely different meanings. And of course the PBoC is so out of it that it takes 2-4 years before the PBoC's collections to occur after the Hong Kong "cause". It couldn't possibly have anything to do with those years being a low point in gold.

    And too bad they only have almost 20 million ounces too, they're such a woos of a Central Bank. The last time I read the raw facts, 600 tonnes is almost identical to zero tonnes too. And of course Central Banks always tell the absolute truth on their balance sheets, so the PBoC couldn't possibly have more than stated. I almost forgot, gold doesn't play any part in their 4000+ year history either.

    And here you assert yet another odd logical fallacy by not only saying I ignore your HK statement after I'd addressed it earlier, but primarily that you then blithely ignore the 2000 and 2001 purchases. One point for the ad hominem too.

    I imagine your comments about Chartalism to me would be just as creative.

    Last edited by bart; 02-03-07, 02:02 AM.
    http://www.NowAndTheFuture.com

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    • #32
      Re: IMF urged to sell gold to battle cash crunch

      Originally posted by bart
      And too bad they only have almost 20 million ounces too, they're such a woos of a Central Bank. The last time I read the raw facts, 600 tonnes is almost identical to zero tonnes too. And of course Central Banks always tell the absolute truth on their balance sheets, so the PBoC couldn't possibly have more than stated. I almost forgot, gold doesn't play any part in their 4000+ year history either.

      Chinese gold, silver and opium are not a very pleasant part of Chinese history.

      Paper Money
      Paper money NINTH CENTURY AD The Chinese invented paper money at the end of the eighth or beginning of the ninth century AD. Its original name was 'flying money' because it was so light and could blow out of one's hand. The first paper money was, strictly speaking, a draft rather than real money. A merchant could deposit his cash in the capital, receiving a paper certificate which he could then exchange for cash in the provinces. This private merchant enterprise was quickly taken over by the government in 812. The technique Paper 'exchange certificates' were also in use. These were issued by government officials in the capital and were redeemable elsewhere in commodities such as salt and tea. was then used for the forwarding of local taxes and revenues to the capital.
      When the Mongols came to power in China, they issued a quaint form of paper money called 'silk notes'. The deposits behind this currency were not precious metals but bundles of silk yarn. All older money had to be cashed in and exchanged for silk notes, and the Mongols spread this unified currency all over the Empire and even beyond. By 1294, Chinese silk notes were being used as money as far afield as Persia. In 1965, two specimens of 'silk notes' were found by archeologists.
      When Marco Polo visited China, he was so impressed by paper money that he wrote a whole chapter about it, describing everything about its manufacture and circulation. He described the manner in which it was issued: All these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver; and on every piece a variety of officials, whose duty it is, have to write their names, and to put their seals. And when all is duly prepared, the chief officer deputed by the Khan smears the Seal entrusted to him with vermilion, and impresses it on the paper, so that the form of the Seal remains printed upon it in red; the Money is then authentic. Anyone forging it would be punished with death.
      http://library.thinkquest.org/23062/money.html

      From late 800AD to 1500AD the Chinese use paper money, this is the zenith of their civilization. This is a very long period of time for a money system to last, Tally Sticks in England had a similar length of time. Chinese are familiar with fiat, I believe they still hang people who counterfeit. Cowry Shells were more popular than gold or copper in ancient China.
      Last edited by Tet; 02-03-07, 10:37 AM.
      "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
      - Charles Mackay

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      • #33
        Re: IMF urged to sell gold to battle cash crunch

        Originally posted by jk
        i don't recall anyone, in any of my readings on this board or elsewhere, suggesting that the chinese needed gold for the creation of money. in fact, it is universally reported that they print yuan to buy dollars earned by their exporters. [sometimes they may try to sterilize those yuan by issuing bonds.] the reason i and many other observers think the chinese want gold is that gold is something they can buy with all those dollars they've been accumulating. at least "gold" is part of what my decoder ring says when i input "diversify reserves."
        tet, you've never addressed my question here: why wouldn't the pboc prefer gold to [at least some of their] dollars?

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        • #34
          Re: IMF urged to sell gold to battle cash crunch

          Originally posted by jk
          tet, you've never addressed my question here: why wouldn't the pboc prefer gold to [at least some of their] dollars?
          I would think the pboc likes gold to the extent of gold being an inventory to be consumed by industry and would treat gold much the same as I would treat the inventory I try to stock to support my own manufacturing. I try to stock inventory that in turn makes me money, especially inventory that gets used in many of the assemblies we manufacture. Looks like 2% of China's reserves being gold has supported the level of gold they try to maintain.

          I would look more at what is the medium of exchange for the oil and gas that China is importing from Russia and Central Asia, it's not the d0llar anymore and certainly not gold. I haven't found anything that gives a clear indication of whether it's the Yuan or the Ruble or both. I'm pretty sure when both Russia and China talk about diversifying their reserves this is what they mean by it, trading for other currencies, not selling the d0llars they already have.

          Now purchasing gold for China could become a political choice as well. Maybe China increases their gold purchases to South Africa in order to help South Africa's economy. I'm not sure if the Chinese are going to buy the IMF gold or just act like they want to and decide not to at a later date. Whatever the decision is, it will be in China's best interests.
          "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
          - Charles Mackay

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