imf gold will never see the light of day

  1. SCD
    3,438 Posts.
    Few people know, for example that China, which became the top gold producer in the world this past year, is a net importer of gold. (Annually, it produces about 275 tonnes and consumes about 325 tonnes.) In short, the biggest market for Chinese gold is the Chinese people themselves, and the demand is large enough to consume everything China produces.

    Beyond direct retail demand which is likely to increase as China prospers (the Chinese people have a particularly strong attachment to gold), there is the question what China is likely to do with all the dollar reserves it has piled up over the past few years. There are constant rumors that its huge sovereign wealth fund is buying gold. The central bank has also been cited in press reports as a potential buyer. Should any significant tranche of gold be made available, there is a strong chance that China might be a buyer.

    Similarly, Russia, the fifth largest producer, is a net accumulator of gold. Only in its case, acquisitions are being made in the open as part of its central bank operations. In 2005 First Deputy Chairman of the Central Bank Alexei Ulyukayev, undoubtedly with President Vladimir Putin's blessing, said the bank would be purchasing gold "on all markets on which it is available," meaning both domestic and foreign markets. This gold will become part of Russia's national reserves and serve as a bulwark for the ruble.

    So, in the case of the world's first- and fifth-largest gold producers, the gold in essence never leaves its borders. What appears to be production that should grease the wheels of international supply is actually gold hoarded by the nations which produce it.
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