Sabah firm is bullish on China's new gold standard
Published on: Saturday, May 14, 2016
Kota Kinabalu: Borneo Oil Berhad (BornOil), formerly Sugarbun bought over from the Sarawak-based owner by a public-listed Sabah firm in the past, is upbeat on China's new gold standard prospect.The Mainland Chinese government has emerged as the biggest buyer of gold, mainly off-market. Reportedly, they want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue.
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This is due to Borneo Oil Berhad's foray into gold mining in Pahang at five sites on 1,500ha mine as part of its core businesses besides the fast food enterprise that has expanded well into foreign countries across Brunei, China, Australia and Bangladesh with 86 outlets.BornOil is a sub-contractor of Champmark Sdn Bhd in alluvial gold mining and exploration activities in Mukim Batu Yon. The area was contracted to Champmark by MMC Corp Bhd, which has leased it from Perbadanan Kemajuan Negeri Pahang.Daily Express met the key business brain behind the enterprise by chance on flight back here who wanted to maintain a low profile of anonymity at the Kuala Lumpur International Airport recently, and was shown a few gold nuggets from its mine.
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"This is the best investment we have ventured into," he said, adding that the company first embarked on gold mining activities several years ago. "Our shares are now backed by gold."Victoria Limited (25.48 per cent share) and Hap Seng Insurance Services Sdn Bhd (16.72 per cent share) are two substantial shareholders of BornOil, with its gold inventory stands at more than 11,898 ounces (370kg).
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If based on gold price per ounce of US$1,090 (RM4,796), its gold inventory is valued at roughly RM57.45 million. BornOil would also expand its limestone mining activities in Sabah into the more profitable downstream operation with 158ha of limestone mining area in Ulu Segama, Lahad Datu.Why are the Mainland Chinese hoarding so much gold? Does China plan to back the yuan with gold and turn it into a global reserve currency? Could it be possible that China actually intends for the yuan to eventually replace the US dollar as the primary reserve currency? Some experts say China doesn't just want to compete with the United States. Rather, China actually plans to replace the United States as the dominant economic power. In fact, China already accounts for more global trade than the United States does. So what would happen if China announced that it was backing the yuan with gold and that it would no longer be using the US dollar in international trade? It would cause a financial shift so cataclysmic that it is hard to even imagine. Most of those that write about the "death of the US dollar" usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned. China owns about a trillion dollars of US debts, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.China has had to use the US dollar in international trade because there has not been an attractive alternative. A gold-backed yuan would change all of that very rapidly. The Chinese government has already been busy promoting the use of the yuan in international trade.Hence, BornOil is bullish about its business prospects in the future if China did not meltdown, and governments keep printing money to fuel economic growth termed as qualitative easing.Stay up-to-date by following Daily Express’s Telegram channel.
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