Exceptional strong gold demand from both the Chinese central bank and private sector has been driving up the gold price over the past two years, by which they have taken over control over the gold price from the West. The People’s Bank of China (PBoC) bought a record 735 tonnes of gold in 2023, of which about two thirds were purchased covertly. In addition, the private sector net imported 1,411 tonnes in 2023, and a whopping 228 tonnes just in January of 2024. If the West joins the Chinese gold buying craze, in fear of rate cuts and currency debasement, it will be a perfect storm for gold.
So much astute data and information. It seems there is a paradigm shift occurring where we are observing less sensitivity to price and continued accumulation in the East with India being the only outlier. Also interesting to note that the West selling into this strength, which isn’t the norm to supply this seemingly insatiable grab from the East. Maybe the price explodes when either India or the West begin accumulating Gold regardless of price direction in the future and that might be soon.
I see it as China (and others) getting out of their huge US Dollar reserves gained by merchandise sales to the West by buying gold as secretly as possible, and so avoiding crashing the Dollars they still hold.
Its a good strategy because in the process it makes the gold they have already bought much more valuable, without much devaluation of the Dollars (so far).
But ultimately they obviously expect the Dollar to fall, perhaps collapse. Ultimately it may be their withdrawal from the US Bond markets, such as not buying in forthcoming auctions, will make that happen when China is ready. One big reason that will help them decide is if they no longer expect so much trade with the USA because of trade sanctions, tarifs and loss of confidence, so they won't need Dollars anymore. Like now.
So if they don't turn up for the next auction, we will know that China has decided it is ready, and the USDollar will be toast soon after.
So much astute data and information. It seems there is a paradigm shift occurring where we are observing less sensitivity to price and continued accumulation in the East with India being the only outlier. Also interesting to note that the West selling into this strength, which isn’t the norm to supply this seemingly insatiable grab from the East. Maybe the price explodes when either India or the West begin accumulating Gold regardless of price direction in the future and that might be soon.
Great piece. Thank you for sharing it.
I see it as China (and others) getting out of their huge US Dollar reserves gained by merchandise sales to the West by buying gold as secretly as possible, and so avoiding crashing the Dollars they still hold.
Its a good strategy because in the process it makes the gold they have already bought much more valuable, without much devaluation of the Dollars (so far).
But ultimately they obviously expect the Dollar to fall, perhaps collapse. Ultimately it may be their withdrawal from the US Bond markets, such as not buying in forthcoming auctions, will make that happen when China is ready. One big reason that will help them decide is if they no longer expect so much trade with the USA because of trade sanctions, tarifs and loss of confidence, so they won't need Dollars anymore. Like now.
So if they don't turn up for the next auction, we will know that China has decided it is ready, and the USDollar will be toast soon after.
Great stuff. I'm struggling to confirm the Chinese monthly gold import chart though, could you please provide a link to the source?