China Back to Buying More Gold
SHANGHAI (Reuters) – China’s central bank resumed buying gold for its reserves in November after a six-month pause, official data by the People’s Bank of China (PBOC) showed on Saturday.
That’s the story. China is serious about gold and that is not going to change even if the People’s Bank appears to be out of the market for a while. China remains both the world’s largest official sector buyer of gold and the world’s largest gold producer.
Reuters reports that China’s central bank bought 160 thousand troy ounces of gold in November. The official institutions of China may not have been entirely absent from the gold market during the reported pause. It is widely believed that in addition to its central bank, the Red Army, the Communist Party, and other nominal owners may be stockpiling gold outside of the official numbers.
When Chinese authorities got tired of impoverishing and punishing their population with communism, Deng Xiaoping, the Chinese reformer, cracked open a door to the middle class for a great number of the world’s people. It was at that point that China became a powerful force in the global commodities markets. That means that it became an important source of demand for the things that things are made of: copper for power lines, steel for automobiles, aluminum for refrigerators and other appliances, zinc for paint, and lead for batteries.
And gold for money!
India, with an economy now growing at an enviable 6.5 percent rate, gets it too – about gold that is! It is the second largest gold market. Even if we leave central bank buying out of the equation, Asia accounts for 60 percent of gold demand.
An recent on the global financial news portal FX Empire stated that “a growing consensus of Wall Street’s most powerful institutions believe China is planning to increase its Gold holdings by an estimated 15%, if not 20%, of its total bullion reserves by 2028.”
Even as China adds to its gold holdings, its US dollar reserves keep shrinking. With President Trump’s tariff fanfare and the weaponization of foreign dollar holding by the US State Department, China is clearly positioning itself for troubled waters in the months ahead.
When China is in the market to buy gold, we want to be buying gold as well!
Now, with gold price dipping in response to the Federal Reserve’s latest interest rate cut and premiums low, is a very inviting opportunity to acquire gold for the inflationary months ahead!