After writing “The Big Reset” in 2013, Willem Middelkoop became intimately familiar with China and its quest to dominate the global gold market. In an interview, he explained how much gold China really controls and what it intends to do with it. This is the resumé.
China sees gold as a hedge against the financial system and the reserve holdings they have right now. They know we’re in the endgame with the dollar as a reserve currency. China still has $3.2 trillion dollar reserves. They have to accumulate gold to protect themselves.
China had a huge amount of gold before World War II, but most of it was stolen by the Japanese after an invasion. After the war when Mao Zedong declared the New Republic of China, the Kuomintang fled to Taiwan with the rest of the gold and China’s vaults were empty. So there’s a strong desire to rebuild their gold reserves.
Officials statements say the Chinese government only has 1.800 tons of gold, 2% of all foreign exchanges reserves. Russia already has 10% gold against its foreign exchange reserves, Europe and the United States have 50% or more reserves in gold. So China wants more gold, lots of gold.
But the Chinese know the financial history very well. There is an official Chinese program called “storing gold with the people”. Physical gold holding tops 10.000 tons, stored with commercial banks, with companies and the Chinese people. At least half of it is owned by Chinese citizens.
In a real crisis, they know they can confiscate gold and hand out paper money in return, just like the Koreans did during the Asian crisis and the United States did in 1933 when President Roosevelt forced American people to hand over their gold.
The Chinese government only buys small amounts of gold to keep the price of gold low. They want to buy gold as cheap as possible. They are very clever the way they play it. If they want to send gold to $3.000 per ounce, they could do so any week by bringing out a release they will convert 25 percent of their financial reserves to gold.
China wants to own the price of gold
But the Chinese do not only want to own the gold, they also want to own the gold price. Price mechanism is slowly moving east. They have built a gold exchange in Shanghai where almost anybody can open an account to trade gold futures. One out of three trades at the Shanghai Gold Exchange leads to a physical delivery, whereas on the Comex only 1 in 300.
If you look at the number of futures traded right now, in silver more futures are traded in China now than in the United States. The amount of gold traded in Shanghai is starting to compete with the Comex.
But the trading mechanism needs to be backed with physical gold. That’s why they are buying gold vaults all over the world. You need to know the gold is there. When you control the vaults and the settlement system, you own the pricing mechanism.
Revaluation of gold
China is planning for the next phase of the financial system where gold plays are a more dominant part of the system. The Chinese think gold prices will go much higher. By bringing gold back into the system, you can increase trust into the monetary system to avoid hyperinflation. That’s their goal.
Say you revalue gold at $8.400 all central banks would benefit, especially the Federal Reserve. The Federal Reserve still values gold at $42 per ounce. If you revalue these gold holdings, the $11 billion currently present on the balance sheet, would grow to $2.2 trillion. It’s a very easy way to clear up the messy balance sheets for central banks. To revalue gold is an easy solution to the mess.
Read our Guide to Gold for Free …
OR … 10 ten baggers for just ten dollars
We came up with ten stocks, which have the potential to become ‘ten baggers’. Stocks that can tenfold your returns, when this market really gets going.
We combined these 10 ten baggers is a separate report, for the symbolic low price of $10. So, 10 ten baggers for ten dollars. That’s the gesture we can do, to win your confidence for our research products. (It’s a one-off payment, NO subscriptions attached!)
YES, give me those 10 baggers!