First to Report. China is Taking Gold Public
Real Assets Flowing West to East. From Over-valued to Under-valued
One of our colleagues tweets
rush to press, unedited version
China's Golden Strategy
Reshaping the Global Financial Landscape With unprecedented economic uncertainty and global geopolitical tensions, gold returns to the center of safety in finance.
China’s assertive gold buying has caused waves around the world economy. Beijing’s gold accumulation over the past decade attracted the attention of financial markets and policymakers internationally. While China doesn’t often trumpet its purchases of gold, many analysts believe that the country acquired more than any other entity in history, around 400 metric tons, over the past several years.
Several motivations behind these purchases include diversification of foreign exchange reserves (in light of growing doubts about China’s long-standing position as the largest holder of U.S. Treasury bonds), hedging against inflation (amid mounting concerns on rising debt. China’s increase in its gold reserves has also boosted global demand for Gold causing prices to rise.
Those changes affect economies at large from Russian mineshafts to those of Australia and South Africa. These countries could take advantage of the high gold prices and could rework their valuable metals reserve strategy as well.
For economies with more substantial foreign exchange assets or FX exposure to GDP, the move could be viewed as an abrupt wake-up call in terms of hedge.
Central banks are looking at physical gold itself as the ‘only true form’ of currency.
Nonetheless, the shift away from USD exposure among China’s FX reserves is likely to have bigger ramifications.
A lower Dollar would raise import costs into the USA and may impact worldwide exchange equilibrium as most fundamental products, including crude oil, are costed utilizing USD.
Beijing is proceeding with this plan while all of BRICS follow suit tipping the dollar into a tailspin
Perhaps even more interesting about this continuing story, is the concept that China’s gold buying program could represent the beginning of the creation of a new global reserve currency, otherwise known as “SDR III”.
If yuan is fully internationalized and convertible to gold, then it will reduce US Dollar’s hegemony and this started the second US walked into Russia
This may even pave the way for a re-evaluation of gold’s place in modern finance and open the door for gold-backed innovation in areas such as payment processing or currency exchanges.
Put simply, this implies that China’s gold accumulations will have far more impact on issues such as global commerce, exchange-rate values, and the future course of the world monetary regime.
The spike up to 10% difference (arbitrage) between the Shanghai price of Gold and Western paper price (smash price) is the story you won’t read in the West but will read exclusively on MineralWEALTH
Previous reports today