China’s gold hoarding worries Wall Street, analyst says

The People’s Bank of China is “the world's biggest gold hoarder and the bane of Wall Street traders,” the WantChinaTimes Web site is reporting, citing a recent interview of Hong Kong financial analyst Leung Hai-ming with the Chinese-language news site BwChinese.

Leung says the central bank bought more than 1,000 tons of gold in 2013, or about one-third of global gold production. The bank “will likely keep hold of the gold, limiting the gold trading volume — a concern for both the U.S. government and Wall Street traders.”

Leung repeats a long-held “conspiracy theory” that the U.S. Federal Reserve loans gold to major investment banks, which in turn flood the markets and buy it back later.

However, when China “sees that gold prices are going down, the first thing it does is buy them, and does not sell when prices continue to fall.”

The Chinese central bank’s actions remain shrouded in secrecy, but at least one expert, Koos Jansen of the In Gold We Trust blog, sees a recent uptick in nonofficial gold purchases on the Shanghai Gold Exchange.

“In week 21 (May 19 – 23) Chinese wholesale gold demand, measured by SGE withdrawals, was 36.4 metric tonnes, up 22.98 % from the week before,” he wrote. “This is the highest weekly demand since week 9 (February 24 -28). 36.4 tonnes is just shy of the year to date weekly average of 37.5 tonnes.”