This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

China Puts Gold Where Its Money Is

Here both the mainstream media and even many commentators within the precious metals sector have done a terrible job in explaining the rules that relate to the reporting of gold reserves. It must be understood that legally/technically there are two entirely separate ways in which nations can add to their gold reserves.

Nations can purchase gold internationally/on the open market or they can acquire gold from domestic sources. If a nation accumulates gold in the former manner, it is required to report/disclose every ounce of reserves added (or sold) in essentially a real-time manner. However, if/when a nation accumulates gold from domestic sources, it has no obligation to report any gold acquired in that manner - ever.

This explains the writer of the above article making careful use of the word "updated" when referring to the increase in China's gold reserves, reported in 2008. This was a voluntary disclosure; in other words, it reflected gold reserves that China had added from domestic sources and which it had chosen to disclose.

At this point, those readers not already aware of this fact need to know that China is the world's No. 1 gold producer, and by a large margin. This is no accident.

Rather, it marks what can only be termed a "fanatic" drive to increase China's gold production as much as possible as fast as possible.

In 2002, China was the world's fourth-largest gold-producer, producing a (relatively) paltry 175 metric tons per year. By 2006, China had amazingly more than doubled that output to 360 tons/year -- at which point gold production flattened out, until a sudden/surprising surge in reported production by more than 12% in 2012, taking annual mine production to just over 400 tons per year.

This has occurred as gold-production has been eroding in most of the the world's other, leading gold-producing nations, most notably South Africa -- the former (longtime) No. 1 gold-producing nation.

This decline has occurred primarily through declining grades, rather than declining tonnages being mined, and by 2011 anecdotal reports were already coming out of China of a similar trend in its own gold production. One suspects that last year's sudden surge will not/cannot be repeated and that "Peak Gold" has now arrived in China as well. Of equally important note: none of this mined gold ever leaves China. Indeed, it is doubtful if any reaches its own domestic market. To service the private demand of its own citizens, China imports vast quantities of gold, now rivaling the near-legendary appetite for gold of India.

2 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,919.59 +80.85 0.48%
S&P 500 1,981.60 +9.86 0.50%
NASDAQ 4,527.5140 +19.2020 0.43%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs