The People's Bank of China PBOC , the country's central bank, controls how much gold enters China through a system of quotas given to commercial banks. It usually allows metal in but sometimes restricts flows. Now we are getting them The PBOC did not respond to a request for comment.
Its overdependence on the dollar has been behind its silent gold-buying spree that raised its reserves from 1, tons in to 1, The US threatened not only Chinese stocks listed in the US with delisting, but slapped massive tariffs on their exports.
The move increased the prices of American goods, a move that not only caused a massive shockwave in the market but also angered the US president so much that he called China an outright currency manipulator.
It is this Chinese desire to counteract a highly US dollar-centric system that has seen the country buy up massive amounts of gold as part of its alternative investments. One factor that has gone almost unnoticed is the massive accumulation of gold by Chinese citizens.
They have collectively imported over 12, tons of gold into the country since Switzerland might be a global leader in gold imports, but it is also the largest exporter of the premier precious metal.
Switzerland is such an exporter of gold that of the 3, tons of the yellow metal produced in the country in , 2, tons went to exports. The East Asian nation not only stores its imports but also buys a large share from Hong Kong, the fifth most prolific importer of the precious metal.
The Pearl of the Orient bought tons or 8. In that year, Hong Kong sold 1, tons to China, dipping its hands into its reserves in its bid to meet the insatiable Chinese demand for gold. The Chinese have not always had it easy with gold. If the world had been willing to reset the system to a sound basis, it would have done so in Instead, it printed at record levels to patch over Now we are beyond the point of no return.
GDP and is , U. Personal debt per citizen is another 60, U. Latin fiat means "let it be done": Governments only decree that an intrinsically valueless object is legal tender. Good, trustworthy money needs limited supply. Precious metals were the money of choice for thousands of years.
Paper fiat currencies are in unlimited supply if the government chooses, and thus can fail as a store of value; politically independent central banks should restrain governments which historically always lost discipline eventually. In , President Trump threatened to fire his own nominee as Federal Reserve Chairman, Jerome Powell, if he does not cut interest rates. Countries around the world prepare for the time when the US dollar as the single reserve currency will end.
Proponents often view the precious metal as a hedge against economic chaos, while critics typically claim gold is hardly more than an unproductive rock. Interestingly, some countries appear to believe gold is quite important, and one former Fed chair explains why. Alan Greenspan, who served at the helm of the Federal Reserve for nearly two decades, recently penned an op-ed for the Council on Foreign Relations discussing gold and its possible role in China, the world's second-largest economy.
Greenspan also believes the downside risks for China stockpiling gold are limited, at least from a pure investment point of view.
The People's Bank of China has not formally disclosed any changes to its gold holdings in years, but it's believed that the central bank is purchasing gold to diversify its reserve holdings.
In , China announced that it boosted its gold reserves by tonnes via acquiring gold quietly over the previous five years.
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