Several rumors are doing the rounds that a central bank is stock piling physical silver in order to increase its stores of reserve assets. While there is no actual proof as to which bank is doing it, speculation abounds and some people have their suspicions.
If the above-mentioned rumors are true, then estimates of silver being $70 an ounce by year end could be ridiculously off the mark despite rampant silver market manipulation. It is very probable that the silver price will be significantly higher than $70 an ounce by year end. Such speculation encourages gold investors to shift their focus to silver as there is a small killing to be made should it be true that a central bank is storing up on silver as a reserve asset.
Silver Bullion is of the opinion that the Central Bank of the Republic of China is the “unknown” central bank that is stock piling silver. It is after all no secret that China became a net importer of silver last year in access of 100m ounces after being a net exporter of silver about 5 years ago. The Central Bank of the Republic of China was established in 1924. The Executive Yuan of the Chinese Republic is responsible for administering the institution. Prior to 1949, the CBRC was one of four big banks in the country. The other three banks include the Farmers Bank of China, the Bank of Communications and the Bank of China.
In 1949, main land China was lost in the civil war and the Central Bank of China was moved to Taiwan. Later, in 1961, it was again established as the central bank while the Bank of Taiwan was acknowledged as the de-facto central bank of Taiwan. The Bank of Taiwan was responsible for issuing Taiwan dollars until 2000, after which the Central Bank of China followed suit. It was at this point that the Central Bank of China was named the Central Bank of the Republic of China. Many other corporations underwent name changes courtesy of the administration of the Chen Shui-bian.
If China begins to accumulate silver as an asset reserve, investors should act swiftly and accumulate as much silver as possible. No doubt silver will start to perform increasingly well and become even more valuable than it is at the moment (despite rampant silver market manipulation). Like previously mentioned, while China has been exporting silver in the past, it has now started importing the precious metal on a massive scale. Their stance has changed as there is massive investment demand for physical silver within China. Needless to say, the Chinese Government is actively encouraging their citizens to buy and hold physical silver. China is however not the only country moving in this direction. Many countries in Middle East are also serious about the acquisition of physical silver.
The ever increasing demand for silver in China will no doubt see the silver price increase dramatically over the months and years to come (despite rampant silver market manipulation), especially when fiat currencies such as the U.S. Dollar completely collapse. Chinese people use silver in a variety of industries, including silver jewelry. Silver is set to remain bullish, and it is likely that other commodities might become less valuable. In 2010 alone, silver imports into the communist country quadrupled. China imported 3500 tons of the poor man’s gold in that year. Soft economic news in America and China and the debt situation in Greece have caused other commodities to be negatively affected.
It is possible that China’s Central Bank is capitalizing on the debt problem in the Eurozone, and smart investors should pay attention to this. People in the know see physical silver as money that cannot fail like paper currency (non-redeemable paper notes, fiat currency, electronic currency) is set to do.