Tag Archives: GATA

Skepticism reigns about the True state of Chinese central bank gold reserves

One of the most mysterious and unresolved questions in the gold world centers on how much gold reserves the Chinese State, through the Chinese central bank, actually holds. Since October 2016, the People’s Bank of China (PBoC), China’s central bank, has continued to announce unchanged gold reserves each month and persistently claims that its official gold reserves remain static at 1842 tonnes.

That reporting comes through China’s State Administration of Foreign Exchange (SAFE) and is also reported by China to the International Monetary Fund (IMF), as part of the IMF’s International Reserves and Foreign Currency Liquidity (IRFCL) project which collects and disseminates official reserve asset data of the world’s central banks.

This IMF official reserve asset data includes monetary gold holdings, foreign currency reserves, and IMF Special Drawing Rights (SDRs) etc. As can be seen in the below table extracted from the IRFCL database on the IMF website, the figure for China’s monetary gold holdings, which is stated in fine troy ounces, is 59.24 millions, (i.e. 1842.61 metric tonnes). This is also the same gold holdings data that the World Gold Council then extracts from the IMF database and publishes on its own website.

However, as the IMF notes, “Countries participating in this endeavor [IRFCL reporting] do so on a voluntary basis“. The IMF also adds a disclaimer to the data stating “Please note that the re-dissemination of the template data by the Fund (IMF) does not constitute endorsement of the quality of the data by the Fund.”

What China reveals to the IMF – China’s official reserve assets, August 2018

A Leopard doesn’t change its Spots

China has a long track record of being cagey about providing information on the true state of its monetary gold reserves. For example, in April 2009 it announced that its gold holdings had jumped from 600 tonnes to 1054 tonnes, a figure it had not updated since 2003. No one would believe that China had suddenly just bought 454 tonnes in April 2009. The reality was that China was buying on the quiet, under the radar. As Reuters noted at the time on Friday 24th April 2009:

China disclosed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.

Again in July 2015, China made a surprise announcement, revealing (or claiming) that its gold reserves had increased from 1054 tonnes to 1658 tonnes. As the Financial Times commented in an aptly titled article “China breaks 6-year silence on gold reserves“, saying that

China ended years of speculation about its official gold holdings by revealing an almost 60 per cent jump in its reserves since 2009.”

So CHina had broken a 6 year silence, and not suddenly bought 604 tonnes of gold. In July 2015, the PBoC confirmed that it would begin following  the IMF’s Special Data Dissemination Standard (SDDS) international reserves reporting template which requires contributing countries to provide updated gold reserve data to the IMF on a regular basis. For a while from July 2015, the PBoC reported monthly increases in its gold reserves each and every month.

However, these monthly updates (of constant monthly gold buying) mysteriously came to a halt in October 2016, after which the PBoC claimed each and every month since then to still hold 1842 tonnes of gold. It has now been a full two years since the Chinese State has claimed to have purchased any gold for its strategic gold reserves. In other words, the Chinese have gone silent again.

Is it naive to believe that a secretive nation which has a long track record of buying gold under the radar only to announce the buying later would suddenly stop this practice? Why would China sign up to providing regular updates to the IMF about its gold buying only to back-track 15 months later and put a lock-down on updates? What to believe?

The Survey Said…

We therefore decided to do a Twitter survey via the BullionStar Twitter account  (@BullionStar) to find out what percentage of people actually believe the official Chinese story? As it turns out, pretty much no one believes the official Chinese line, but the results are surprising in what they do show.

In the Twitter poll we asked “How much gold does the Chinese central bank (PBoC) really hold?” and provided four options….:

  • 1842 tonnes as it claims
  • more than 1842 tonnes but less than 4000 tonnes
  • more than 4000 tonnes
  • less gold than it claims i.e. less than 1942 tonnes[

Although the 4000 tonnes level might seem like an arbitrary number, it took into account that if China, the world’s second biggest economy, wanted to be towards the top of the major league of the world’s central bank gold holders, then it would need to hold more gold than the claimed gold reserves of major central bank gold holders such as Germany (3373 tonnes), Italy (2451 tonnes) and France (2436 tonnes), as well as at least half the amount of gold that the US Treasury ‘claims’ to hold (which is 8133 tonnes).

The Twitter survey ran for 2 days and had a substantial 2337 respondents casting a vote, which is arguably quite a lot as Twitter surveys go. A full 91% of respondents (2127 votes) do not believe the official figure put out by the Chinese central bank, with only 9% of respondents (210 votes) thinking that the PBoC has 1842 tonnes of gold as it claims.

A very large 40% of respondents (935 people) thought the PboC holds more than 4000 tonnes of gold. Another 15% (351 people) think that the Chinese central bank has more than 1842 tonnes of gold but less than 4000 tonnes. This means that 55% (1286 people) of the respondents thought that the PBoC has more gold than it claims to have.

But equally interestingly, a sizable 36% (841 people) of the twitter poll respondents think that the Chinese State (through the PBoC) has less gold than it claims, i.e. less than 1842 tonnes. This is interesting because the major alternative view of Chinese State gold accumulation is that the Chinese are bound to have more gold than they claim to have because they are stealthy accumulating it, so as to at some point in the future reveal another large jump in its reserves at a time of its choosing, for example, a jump from 1982 tonnes to 3000 tonnes or more.

But the survey shows that while nearly everybody is skeptical about China’s official gold holdings numbers, in addition to being skeptical on the upside, a lot of people are also skeptical on the downside and think that the PBoC doesn’t even have the amount of gold that it claims to have. This, if it was true, would arguably be more newsworthy than the scenario in which the PBoC has more gold than it claims to have, and is something that hasn’t really been discussed anywhere on the Blogosphere  or Twittersphere or in the mainstream financial media, as far as I can recall.


Since China is well-known for overstating numbers related to economic data and quantities of all sorts, then it is possible that the Chinese gold has less than 1942 tonnes of gold. Nobody knows. The reason that nobody knows is that neither Chinese, nor any of their central bank contemporaries around the world, ever allows any independent audits of their gold reserves.

Nations’ monetary gold reserves are in nearly all cases treated as state secrets and are often exempt from Freedom of Information Requests. As Chris Powell of GATA is fond of saying, the size and disposition of national gold reserves is a more closely guarded secret than even the existence and location of nations’ nuclear weapons, such is the secrecy that surrounds the topic of monetary gold reserves.

Some reasons why the Chinese State probably hold more than 4000 tonnes of gold. Click to enlarge. Source: BullionStar here


My personal opinion is that the Chinese State has a lot more monetary gold reserves than 1842 tonnes, and even more than 4000 tonnes, that they are constantly accumulating gold. For example its known that the Chinese State buys gold on the London gold market and flies it in their own airplanes to Beijing.

I also think the Chinese have even been receiving large quantities of gold from other central banks behind the scenes in a formal but secret redistribution, for example Banque de Italia sells x tonnes to PBoC (which may sound strange but I heard that this had happened). I also believe China most likely purchased IMF gold in 2010 in the IMF’s secretive ‘on-market’ gold sales, using the Bank of International Settlements (BIS) to price the transfer. Some of the Swiss central bank gold sales in the early 2000s (which look to have actually been executed in the late 1990s and then squared off) are also candidates as surreptitious gold transfers from Western central banks to the Chinese state. Some of these transfers would also point to the probability that China holds some of its gold reserves in the gold vaults of the Federal Reserve Bank of New York (FRBNY) in Manhattan.

So there you have it. A full 91% of survey respondents do not believe the official Chinese position that the Chinese central bank has 1842 tonnes of gold. What to you think? Feel free to leave a comment below with your view.

Paulson’s Shareholders Gold Council finally launches after initial delays

In September 2017, news emerged of a plan to launch a broad-based “Shareholders’ Gold Council” to address poor shareholder returns and under-performance in the gold mining sector. This plan was spearheaded by well-known hedge fund Paulson & Co and its founder John Paulson. Initially earmarked for a launch in June 2018 or early July, BullionStar covered this new Council in detail in a late June article titled “The Shareholders Gold Council (SGC) – “Just don’t mention the Gold Price”.

The aims of the new Council include shareholder representation on company boards, company accountability to shareholders, the removal of poor performing CEOs and board members, and the alignment of CEO compensation with share price performance. All of these aims, it should be noted, seek to reduce the cost base of miners and have little effect on top line revenue or the price that a gold mining company can sell its output for.

Presentation by Paulson & Co to Denver Gold Forum, September 2017, that kicked off the idea for the new Shareholders Gold Council

The new shareholder coalition will also make recommendations on board appointments, CEO pay, company takeovers, and make recommendations on AGM and EGM voting decisions, similar to the myriad reports that are churned out daily by proxy advisory firms Institutional Shareholder Services(ISS) and Glass, Lewis and Co.

16 Members, 4 of which are Anonymous

Throughout the summer, there was no news flow whatsoever about the new Council and the launch appeared delayed. The existence of such a delay was officially confirmed this week when Bloomberg ran a story confirming that the grouping has just been launched. The delay, according to the head of the new Council, Christian Godin, was “because of compliance issues and housekeeping challenges dealing with 16 institutions and back-office teams“. Godin joins to head up the Council from Canadian investment management company Montrusco Bolton Investments.

Christian Godin, appointed head of the new Shareholders Gold Council

According to Bloomberg’s story which is titled  ‘Paulson Joined by 15 Investors in Council to Oversee Gold Miners’, the new Shareholder’s alliance, in addition to founding hedge fund Paulson & Co, includes institutional and hedge fund firms Delbrook CapitalTocqueville Asset ManagementLivermore PartnersKopernik Global Investors, Apogee Global Advisors and Equinox Partners. Other named members of the alliance are Adrian Day Asset Management, Swiss based AMG Fondsverwaltung AG, Equity Management Associates, Luxembourg based La Mancha (Naguib Sawiris), and privately-held Sun Valley Gold LP.

According to Bloomberg, there are also four institutional members of the new Council who wish to remain anonymous, bringing the total number of institutions involved to sixteen. Previous coverage of the Shareholders Gold Council mentioned names such as Vanguard, State Street Global Advisors, Blackrock and Van Eck, so these could be some or all of the four that do not want their identities revealed. This preference for anonymity by four  institutional shareholders of gold mining companies is itself worrying, because it begs the question that if they haven’t even got the courage to publicly identify themselves, then how committed and motivated are they really to effect change within the gold mining companies that they invest in.

Don’t Mention the Gold Price

But as detailed in BullionStar’s article in June, there is one topic that this new Shareholders Gold Council could research and investigate, but has blatantly chosen not to. This is the issue of the gold price, an issue that goes to the heart of a gold mining company’s operations and the performance of its share price, including as we explained in June:

“how that gold price is discovered and established in today’s gold markets, whether that gold price is manipulated by bullion bank traders, and whether that gold price is subject to central bank interventions that attempt to control and stabilize it.”

The gold price as it relates to the health and performance of gold mining companies and their shares (common equity) is also a topic that is of interest to the Gold Anti-Trust Action Committee (GATA). GATA is a US-based educational and civil rights organization that was established 20 years ago to, in its own words “expose, oppose, and litigate against collusion to control the price and supply of gold and related financial instruments“.

Letter from GATA to John Paulson, dated 21 September 2018

GATA has even gone so far as to write a letter to John Paulson at the Paulson & Co headquarters in Manhattan, requesting that it be allowed to make a presentation to the Shareholders Gold Council “about the longstanding policy of Western governments and central banks to intervene in the gold market surreptitiously to suppress the monetary metal’s price“. GATA’s letter, dated 21 September 2018, can be read in pdf format here.

GATA’s letter to Paulson refers to:

“the largely surreptitious manipulation of the gold market by governments and central banks, usually undertaken through intermediary brokers and the bank for International Settlements.”

While making references to the fact that GATA has:

found that gold price suppression is actually longstanding Western government policy, acknowledged in government archives and the writings and public comments of many central bankers themselves but seldom reported by financial organizations“.


As someone who has found some of the government archives, writings and comments of central bankers that GATA refers to above, I would have to agree with the statements in GATA’s letter to Paulson. That is why it will be very interesting to see how John Paulson responds to the GATA letter, if indeed he responds at all.

GATA has also asked Paulson if it can join the Shareholders Gold Council, another possibly tall order for Paulson’s new grouping to fulfill, especially since the new coalition is already opaque with four large institutional members not having the courage to publicly put their names on record.

So, will this Wall Street centric New Shareholder’s Gold Council investigate the gold price as part of its remit? Or will it, like its similarly named World Gold Council, not bother to really care what goes on in the central bank gold world. It remains to be seen, but the best answer currently would be “Don’t hold your breath!”

Central Banks Care about the Gold Price – Enough to Manipulate it!

In early March, RT.com, the Russian based media network, asked me for comments and opinion on the subject of central bank manipulation of gold prices.

The comments and opinion that I supplied to RT became the article that RT then exclusively published on its website on 18 March under the title “Central banks manipulating & suppressing gold prices – industry expert to RT“.

This article is now transcribed below, here on the BullionStar website.

Central bank gold price suppression is a well-documented fact. Central banks have a long and colorful history of manipulating the gold price. This manipulation has taken many shapes and forms over the years. It also shouldn’t be surprising that central banks intervene in the gold market given that they also intervene in all other financial markets. It would be naive to think that the gold market should be any different.

n fact, gold is a special case. Gold to central bankers is like the sun to vampires. They are terrified of it, yet in some ways they are in awe of it. Terrified since gold is an inflation barometer and an indicator of the relative strength of fiat currencies. The gold price influences interest rates and bond prices. But central bankers (who know their job) are also in awe of gold since they respect and understand gold’s value and power within the international monetary system and the importance of gold as a reserve asset.

So central banks are keenly aware of gold, they hold large quantities of it in their vaults as a store of value and as financial insurance, but they are also permanently on guard against allowing a fully free market for gold in which they would not have at least some form of influence over price direction and market sentiment.

The Central Bankers’ Central Bank

The Bank for International Settlements (BIS) crops up frequently in gold price manipulation as the central coordination venue and the guiding hand behind a lot of the gold price suppression plans. This is true in all decades from the 1960s right the way through to the 2000s. If you want to know about central bank gold price manipulation, the BIS is a good place to start. Unfortunately the BIS is a law onto itself and does not answer to anyone, except its central banks members.

In the 1960s, central bank manipulation of the gold price was conducted in the public domain, predominantly through the London Gold Pool. This was in the era of a fixed official gold price of $35 an ounce. Here the US Treasury and a consortium of central banks from Western Europe explicitly kept the gold price near $35 an ounce, coordinating their operation from the Bank for International Settlements (BIS) in Basel, Switzerland, while using the Bank of England in London as a transaction agent. This price manipulation broke down in March 1968 when the US Treasury ran out of good delivery gold, which triggered the move to a “free market” gold price.

Central banks continued to suppress gold prices in the 1970s both through efforts to demonetize gold and also dump physical gold into the market to dampen price action. These sales were unilateral e.g. US Treasury gold sales in 1975 and over 1978-1979, and also coordinated (and orchestrated by the US) e.g. IMF gold sales across 1976-1980.

Gold Pool 2.0 – Force it Down Quick and Hard

Collusion to manipulate the price also went underground, for example in late 1979 and early 1980 when the gold price was rocketing higher, the same central banks from the London Gold Pool again met at the opaque BIS in Switzerland at the behest of the US Treasury and Federal Reserve in an attempt to launch a new and secretive Gold Pool to reign in the gold price. This was essentially a revival of the old gold pool, or Gold Pool 2.0.

These meetings, which are not very well known about, were of the G10 central bank governors, i.e. at the highest levels of world finance. All of the discussions are documented in black and white in the Bank of England archives and can be read on the BullionStar website.

Gold for Oil: A Novel Twist to the Gold Pool Operation

The wording in these discussions is very revealing and show the contempt which central bankers feel about a freely functioning gold market.

Phrases used in these meetings include:

there is a need to break the psychology of the market” and “no question of any permanent stabilisation of the gold price, merely at a critical time holding it within a target area” and  “to stabilise the price within a moving band” and “it would be easy and nice for central banks to force the price down hard and quickly“.

And these meetings of top central bankers were in early 1980, 11 years after the London Gold Pool and 8 years after the US Treasury reneged on its commitment in August 1971 to convert foreign holdings of US dollars into gold.

Whether this new BIS gold pool was rolled out in the 1980s is open to debate, but it was discussed across the board for months by the Governors at the BIS, and may have been introduced in a form which would provide physical gold to the oil producers (gold for oil trades) without putting a rocket under the gold price. Their main worry was to allow the Middle Eastern oil producers to acquire some gold for oil without pushing the gold price up.

The Bank of England was also involved in the 1980s in influencing prices in the London Gold Fix auctions, in what an ex Bank of England staffer described euphemistically as ‘helping the fixes’. And the Bank of England has even at times used terminology in the 1980s such as “smoothing operations” and “stabilisation operations” when referring to coordinated central bank efforts to control the gold price.

This article first appeared on RT.com on 18 March 2018

Paper Gold Ponzi

Probably two of the most influential changes on the gold market in the modern era are structural changes to the gold market which channel gold demand away from physical gold and into paper gold. These two changes were the introduction of unallocated accounts and fractionally backed gold holdings in the London Gold market from the 1980s onwards, and the introduction of gold futures trading in the US in January 1975.

In unallocated gold trading in the London OTC market, gold trades are cash-settled and there is rarely any physical delivery of gold. The trading positions are merely claims against bullion banks who don’t hold anywhere near the amount of gold to back up the claims. Unallocated bullion is therefore just a synthetic paper gold position that provides exposure to the gold price but doesn’t drive demand for physical gold.

When gold futures were launched in the US in January 1975, the primary reason for their introduction, according to a US State Department cable at the time, was to create an alternative to the physical market that would syphon off demand for gold, creating trading that would dwarf the physical market, and which would also ramp up volatility which in turn would deter investors from investing in physical gold. Gold futures are also fractionally backed and overwhelmingly cash-settled, and their trading volumes are astronomical multiples of actual delivery volumes.

Central banks as regulators of financial markets are therefore ultimately responsible for allowing the emergence of fractional reserve gold trading in London and New York. This trading undermines the demand for physical gold and allows the world gold price to be formed in these synthetic gold trading venues. Price discovery is not happening in physical gold markets. Its is happening in the London OTC (unallocated) and COMEX derivative markets. So this is also a form of gold price manipulation since the central banks know how these markets function, but they do nothing to crack down on what are essentially gold ponzi schemes.

Imagine, for example, that central banks were as tough on paper gold as they seem to be now on crypto currency markets. Now imagine if central banks outlawed fractional gold trading or scare-mongered about it in the same way that they do about crypto currencies? What would happen is that the gold market participants would panic and unwind their paper positions, precipitating a disconnect between paper gold and physical gold markets. So by being lenient on the fractional structure of trading in the gold markets, central banks and their regulators are implicitly encouraging activities that have a dampening effect on the gold price.

Gold Lending – A Riddle wrapped in a Mystery inside an Enigma

The gold lending market, mostly centred in London, is another area in which central banks have the ability to cap the gold price. Here central banks transfer their physical gold holdings to bullion banks and this physical gold then enters the market. These transactions can either be in the form of gold loans or gold swaps. This extra supply of gold through the loans and swaps disturbs the existing supply demand balance, and so has a depressing effect on the gold price.

The gold lending market is totally opaque and secretive with no obligatory or voluntary reporting by either central bank lenders or bullion bank borrowers. The Bank of England has a major role in the gold lending market as the gold used in lending is almost all sourced from the central bank custody holding in the Bank of England’s vaults.

There is therefore zero informational efficiency in gold lending, and that’s the way the central banks like it. furthermore, freedom of information requests about gold lending are almost always shot down by central banks, even sometimes on ‘national security’ grounds.

Many central banks have lent out their gold long ago, and just hold a ‘gold receivable’ on their balance sheet, which is a claim against a bullion bank or bullion banks. These bullion banks roll over the liability to the central bank for years on end and the original gold is long gone. Since central bank gold is never independently audited, there is no independent confirmation of any of the gold that any central banks claim they have.

Gold receivables are another fiction that allows central banks to fly under the radar in the gold lending market, and central banks go to great lengths to make sure the market does not know the size and existence of outstanding gold lending and swapped gold positions.

In Febuary 1999, the BIS was again the nexus for secretive discussions about the gold market when a number of the large powerful central banks basically ordered the IMF to drop an accounting change that would have split out gold and gold receivables into two separate line items on central bank balance sheets and accounting statements. These discussions are documented in the IMF document which is available to see here.

This accounting change would have shone a light on to the scale of central bank gold lending around the world, information which would have moved gold prices far higher.

Gold Price Manipulation Hub at the BIS: the Central Banker’s Central Bank

Gold Loans and Gold Swaps – Highly Market Sensitive

However, a group of the large central banks in Europe comprising the Bank of England, the Bundesbank, the Bank de France and the European Central Bank (ECB) applied pressure to torpedo this plan as they said that “information on gold loans and swaps was highly market sensitive” and that the IMF should “not require the separate disclosure of such information but should instead treat all monetary gold assets including gold on loan or subject to swap agreements, as a single data item.” 

Central banks also at times sell large quantities of gold, such as the Swiss gold sales in the early the 2000s, and the Bank of England gold sales in the late 1990s.While the details of such gold sales are always shrouded in secrecy, and the motivations may be varied, such as bullion bank bailouts or redistribution of holdings to other central banks, the impact of these gold sales announcements usually has a negative impact on the gold price. So gold sales announcements are another tactic that central banks use to at times keep the pressure on the price.

There are many examples of central bankers discussing interventions in the gold market. In July 1998, former Federal Reserve chairman Alan Greenspan testified before the US Congress saying that “central banks stand ready to lease gold in increasing quantities should the price rise.

In June 2005, William R. White of the BIS in Switzerland, said that one of the aims of central bank cooperation was to “joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.

In 2008, the BIS at its headquarters in Switzerland even stated in a presentation to central bankers that one of the services it offers is interventions in the gold market.

In 2011, one of the gold traders from the BIS even stated on his LinkedIn profile that one of his responsibilities was managing the liquidity for interventions. After this was published, he quickly changed his LinkedIn profile.