Money Metals readers may remember my November 2014 report in which I discussed how gold flowed into China in "tributary fashion" like small streams flowing into a giant one. In this case, the gold has been streaming into China's increasingly massive thousands-of-tons gold hoard.

In January, 2015, I penned an essay titled "China's Global Gold Supply "Game of Stones," outlining China's long-range goal to dominate the world's physical gold market.

Well, events have moved massively forward since then. I want to update you as to just how much things have changed – and how close we may be to experiencing a "defining moment" in the gold market.

I’m talking about a game-changing event that could, with little warning, propel the price of gold upward by hundreds – even thousands – of dollars per ounce in the space of a few weeks... conceivably overnight! (And since silver's price movements are highly correlated with that of gold, we could expect an upside explosion in silver as well.)

China's 4-pronged gold accumulation strategy:

First: Buy physical gold in world markets, re-fabricate it when necessary (into .9999 fine bars in Switzerland), and ship to the mainland.

Second: Hoard all domestically-produced gold... which is now being done, even when produced from operations with foreign-partners. This is also true with silver production, e.g. Silvercorp Metals – a Canadian silver/lead producer with operations on the Chinese mainland.

Third: Partner with (e.g. Pretivm Resources; Barrick Gold-Pascua Lama) or buy outright, gold explorer-producers located on foreign soil.

Fourth: Purchase for cash, gold production "off the books" from 'informa' miners in S.E. Asia, Africa, and South America. China's intent is to supplant the U.S. as the largest holder of physical gold (claimed to be around 8,000 metric tons) on the planet. (Disclosure: I, David Smith, have held for several years, positions in Silvercorp and Pretivm, purchased in the open market.)

Right now, China is vastly understating what it actually holds as well as how much is being imported.

This deception is easier than ever because a significant amount is no longer routed (and thus reportable) through Hong Kong, but rather through other mainland entry ports. What the authorities admitted holding as of last summer was almost unbelievably small compared to what even the official figures streaming through Hong Kong alone, plus domestic production add to the total, and China is now the number one global gold producer. 

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