Gold: Behind the Curtain

16 Apr

Gold: Behind the Curtain

The are some big things going on with gold.  Largely unnoticed developments that we would like our friends and clients to know about.

We have many times, and in many ways, explained that nations that are net acquirers of gold see their influence rise in the affairs of mankind rise.  Those that are dishoarders decline over time.

You may think that this points to China.  You are right.  We will get to that in a moment.  

But first, we want to make sure you saw a story we ran last month about Hungary adding to its gold reserves at breakneck speed!  In its latest announcement, Hungary reports its gold holding has grown from 31.5 tons to 94.5 tons Here is a link.

Although starting from a low level, Hungary has increased its gold reserves by 3,000 percent since 2018.  Because Hungary is a republic, a member of the EU, and of NATO, it can not be said that its move to hold its reserves in gold is driven by opposition to US hegemony, as might be said of Russia, which has unloaded US dollars in favor of gold. 

China gold bars

Or as might be said of China.  

There is more going on with respect to gold and China that meets the eye.  China has become the world’s largest gold producer and largest refiner of gold.  At the same time China’s official gold reserves have grown from 395 tons in 2000 to 1,948 tons in 2020.  

But that is not the whole story.  As we reported last week, noted gold economist Alasdair Macleod has learned from “quasi-intelligence sources” that China’s real gold holdings might be ten times that size, as much as 20,000 tons.  China, which has long been cagey about reporting its gold holdings, might be holding gold in accounts other than with the People’s Bank of China, including the communist party and army accounts.

Now, after having been on the sidelines during the pandemic, China has given the go-ahead to banks to resume importing billions of dollars of additional gold.  Reuters reports, “About 150 tons of gold worth $8.5 billion at current prices is likely to be shipped following the green light from Beijing, four sources said. Two said the gold would be shipped in April and two said it would arrive over April and May.”

We can say with confidence that these moves are a sign of things to come and will be reflected before long in the price of gold.  

Think of it as a word to the wise.