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China knows that the U.S. government and its allies
in Western Europe strive to suppress the price of gold, and the U.S.
government knows that China knows, according to a 2009 cable from the U.S.
Embassy in Beijing to the State Department in Washington.
The cable, published in the latest batch of U.S.
State Department cables obtained by Wikileaks,
summarizes several commentaries in Chinese news media on April 28, 2009. One
of those commentaries is attributed to the Chinese newspaper Shijie Xinwenbao (World News
Journal), published by the Chinese government's foreign radio service, China
Radio International. The cable's summary reads:
"According to China's National Foreign
Exchanges Administration, China's gold reserves have recently increased.
Currently, the majority of its gold reserves have been located in the United
States and European countries. The U.S. and Europe have always suppressed the
rising price of gold. They intend to weaken gold's function as an
international reserve currency. They don't want to see other countries
turning to gold reserves instead of the U.S. dollar or euro. Therefore,
suppressing the price of gold is very beneficial for the U.S. in maintaining
the U.S. dollar's role as the international reserve currency. China's
increased gold reserves will thus act as a model and lead other countries
toward reserving more gold. Large gold reserves are also beneficial in
promoting the internationalization of the renminbi."
It's hard to believe that, two years
later, China is still leaving so much of its gold with the Federal Reserve
Bank of New York and the Bank of England when even little Venezuela has
publicly figured out the gold price suppression component of the Western
fractional reserve banking system and is attempting to repatriate its gold
from the Bank of England and various Western bullion banks:
http://www.gata.org/node/10281
http://www.gata.org/node/10286
It is already a matter of record that China
dissembled about its gold reserves for the six years prior to the public
recalculation of its gold reserves in April 2009 that prompted the commentary
in Shijie Xinwenbao. At
that time China announced that its gold reserves were not the 600 tonnes it had been reporting each year for the previous
six years but rather 76 percent more, 1,054 tonnes:
http://www.gata.org/node/9545
ZeroHedge,
which seems to have broken the story of the Beijing embassy cable this evening,
comments:
"Wondering why gold at $1,850 is cheap, or why
gold at double that price will also be cheap, or, frankly, at any price?
Because, as the following leaked cable explains, gold is, to China at least,
nothing but the opportunity cost of destroying the dollar's reserve status.
Putting that into dollar terms is, therefore, impractical at best and
illogical at worst. We have a suspicion that the following cable from the
U.S. embassy in China is about to go not viral but very much global, and prompt
all those mutual fund managers who are on the golden sidelines to dip a toe
in the 24-karat pool."
The ZeroHedge commentary
can be found here:
http://www.zerohedge.com/news/wikileaks-discloses-reasons-behind-chinas-...
In addition to fund managers throughout the world,
this cable may be of special interest to the gold bears CPM Group Managing
Director Jeff Christian, who says he consults with most central banks and
that they hardly ever think about gold, and Kitco
senior analyst Jon Nadler, who insists that central banks have no interest whatsover in manipulating the gold price.
In fact, of course, gold remains the secret
knowledge of the financial universe, and its price is actually the
determinant of every other price and value in the world.
The Beijing embassy cable can be found here:
http://cables.mrkva.eu/cable.php?id=204405
And, just in case, at GATA's Internet site here:
http://www.gata.org/files/USEmbassyBeijingCable-04-28-2009.txt
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