China’s voracious appetite for gold is hardly news for those who’ve been keeping their ears to the ground.
Since 2009, China has been on a covert mission to accumulate the precious yellow metal.
And, interestingly, they’re no longer keeping their acquisitions under the rug; they’re parading it.
A subtle flex of financial muscle, if you ask me.
Just recently, the People’s Bank of China (PBOC) gleefully reported another hike in their gold reserves for a ninth consecutive month.
This now puts their reported holdings at a gleaming 2,137 tons. To give you some perspective, that’s an addition of around 188 tons since last November alone.
But, and here’s the cheeky bit, we’re not quite sure of the *real* figures. China, ever the master of strategy, will only show its hand when it’s ready. Keep an eye out, folks!
Now, why this insatiable hunger for gold? The simple reason – hedging against the omnipotent US dollar.
By diversifying its reserves, China is making a clear statement: they’re not keen to have all their eggs in the USD basket, especially when the dollar gets weaponized, as we saw with the sanctions following Russia’s invasion of Ukraine.
A rather prudent move, don’t you think?
Rising global interest rates have traditionally been kryptonite for gold. Why cling to non-interest bearing bullion when you can enjoy the yields elsewhere?
Yet, despite this upward tick in rates, gold prices haven’t been bogged down.
Why? Central bank acquisitions, predominantly led by China. But do remember, dear reader, every upward trajectory has its zenith.
When rates eventually fall and the Fed gets back to its old tricks of monetizing the US debt, we’re in for a wild ride!
Now, here’s the *Peter Burke* investment tip, especially for those who like to think several moves ahead.
With China amassing gold, diversifying from the USD, and interest rates in a flux, it may be time for individual investors to consider their positions in gold.
While I’m not advocating a full pivot, it might be prudent to hedge some of your investments with a sprinkle of gold, or even gold-related equities.
In a world where the financial landscape is ever-shifting, China’s play reminds us of the importance of diversification and forward-thinking.
The PBOC’s move also signals a broader sentiment that’s worth noting: Central banks are still banking on gold. And if the institutions that hold the strings to global economies are betting on it, shouldn’t you at least consider it?
China’s increasing gold reserves is more than just an economic strategy; it’s a geopolitical statement, a diversification tactic, and perhaps, a clarion call for investors globally to rethink their portfolios.
Warmly,
— Peter Burke —
