It has been about 18 months since we wrote a research report saying just how serious China’s appetite for gold was.
Today we can report that China is still gobbling up much of the world’s gold. It’s clear that China understands that gold is returning to its central role in the global monetary system.
The People’s Bank of China added 32 tons of gold to its holdings in November, followed by another 30 tons in December.
We note in passing that the period corresponds with gold’s dramatic climb following its testing of lows at $1,620 three times, in September, October, and November.
It appears that China moved aggressively once again to take advantage of today’s low prices. You may recall that gold peaked at about $2,080 in March and was slightly higher before that in August 2020.
It’s not only China that hungers to own gold today. Altogether, central banks bought 673 tons of gold in 2022, according to the World Gold Council.
The Financial Times notes that this is a pace of central bank gold buying not seen in 55 years.
“The last time this level of buying was seen marked a historical turning point for the global monetary system,” a recent article reads. That’s when the post-World War II monetary system, the Bretton Woods agreement, was breaking down. The powerful and historic precious metals bull market of the 1970s followed.
The world has begun de-dollarizing. The handwriting on the wall can readily be seen in the global oil market. China is certainly pleased to buy energy from countries under U.S. sanctions and would like to see the dollar’s role in global markets further marginalized.
Here’s a snippet from OilPrice.com called, “Why We Shouldn’t Underestimate China’s Petro-Yuan Ambitions”:
“Some 40% of proven oil reserves belonging to OPEC+ members is owned by Russia, Iran, and Venezuela–all of whom are selling to China at major discounts, and all of whom are on board with Beijing’s petro-yuan plan.
The countries of the Gulf Cooperation Council (GCC)—most notably Saudi Arabia and the UAE—account for another 40% of proven oil reserves, and they are increasingly cozying up to China.
The remaining 20% is also accessible to China, and China is already the largest importer of crude in the world.”
China is the world’s largest gold producer and refiner, and we know that in the past China, quite unlike the U.S., has actually encouraged its people to own gold. We must assume that China, which only reports its gold reserves sporadically, has gold holdings that are hidden from view. Multiple researchers now suggest China’s actual government gold holdings might be 10 times the size it officially reports, an amount almost 2.5 times those of the U.S.
Only the People’s Bank of China’s gold is officially reported. Additional gold holdings may be parked in the accounts of the Communist Party, the People’s Liberation Army, and other entities.
China is buying gold in preparation for the end of the dollar reserve standard (and, presumably, in case of war).
We suggest that you add to your personal gold reserves as well. The signs that a momentous shift in the global monetary system is in development are all around.
If you’re interested in investing in precious metals, let us provide you with a free one-on-one consultation.
The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.