(Kitco News) China has been on a full-out gold shopping spree — topping up its gold reserves each month for the last 12 months. However, the official numbers are not even close to the actual amounts China is buying, according to Dominic Frisby, Founder of FlyingFrisby.com.
The latest data out of China showed that its central bank bought gold for the 12th consecutive month in October. The latest purchase was around 23 metric tons, which increased the total holdings to 2,215 tons, the World Gold Council reported.
Overall, China's government has recently been among the biggest gold stockpilers during what looks to be another record-breaking year of central bank gold purchases.
And even though China is already the leader in gold accumulation, the real numbers are much more significant, Frisby told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, on the sidelines of the New Orleans Investment Conference.
The official data from China is meant to acquaint the market with the idea that it has more gold.
"They're breaking the news gently. China is extraordinarily ambitious," Frisby said. "I've probably studied this more than anyone, and I will tell you why China's gold holdings are probably ten times what they say they are. And the math on this is quite simple."
China is the world's largest gold producer and gold importer. But the country's motto is "We must not shine too brightly," according to Frisby.
In this century, China has produced roughly 7,000 tons of gold. "More than 50% of Chinese gold mining is state-owned, and China does not export any of the gold it produces. So all the gold that China has mined has stayed in China," he noted.
On the import side, it is not known how much gold China brought in via Switzerland, Dubai, or London, but some estimates can be made. "We know that a lot of gold that enters China goes through the Shanghai Gold Exchange. And we know that 22,000 tons of gold have been withdrawn from the Shanghai Gold Exchange in this century," Frisby elaborated. "So that's 22,000 tons and 7,000 tons — 29,000 tons, and there was another 4,000 tons already in China in the year 2000 that was state-owned."
Based on this, Frisby estimated that China is holding at least 33,000 tons of gold, and half of that is likely state-owned. "16,500 tonnes is twice what America has," he said.
If China turns to the U.S. and says, 'We got twice as much gold as you,' that's tantamount to a declaration of war." To find out why Frisby compares China admitting to its real gold stash with a declaration of war on the U.S., watch the video above.
"If China goes to war with the U.S., it will weaponize money," Frisby said.
Frisby also admitted that China could consider backing its currency with gold. To hear when and why China may drop that bombshell, watch the video above.
Gold price to challenge $3,000 next year, Bitcoin to double & hit $100,000
The gold market breached the $2,000 an ounce level at the end of October, and Bitcoin approached $38,000 last week.
Frisby is optimistic about both assets next year. On gold, Frisby noted that momentum is building. "Gold looks like it's getting ready to move. There's a good chance that gold gets to $2,700 nd maybe even challenges $3,000 next year," he said.
With speculative mania around the approval of spot Bitcoin ETF, Frisby said that Bitcoin could retest its previous all-time highs of $69,000 and then surge to $100,000.
"If Bitcoin breaks out to new highs above $70,000 and gold breaks out to new highs above $2,100, the passage is clear. There's no resistance. Bitcoin could easily go to $100,000 if there's enough speculative mania and enough institutional money coming in," he added.
Frisby also outlines three possible futures for the gold market. Watch the video above to get the scenarios and his price forecasts.
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