Despite its stockpiling of gold, China is not the only country buying and holding gold. Central banks across Asia are buying at the fastest pace in history. Not only are they buying gold, but they are not unloading their holdings in the market.
Central banks are buying gold at the fastest clip on record
During the second quarter of 2018, global central banks have purchased a record-breaking amount of gold. According to the World Gold Council (WGC), this was the largest gold purchase in the world in a single quarter.
According to the WGC, one quarter of all global central banks plan to increase their gold reserves in the next twelve months. This statistic is a record high for any year since the WGC series began.
Central banks have been buying a record amount of gold this year, which is contributing to the renewed support for the gold price. Central banks are the ultimate long-term investors, and they play a crucial role in the stability of the economy.
Central banks are not only buying gold at record levels, but also diversifying their gold holdings. This is important because a central bank has a lot of power in setting the country’s monetary policy. This helps protect against reliance on foreign currencies.
This year is also the first time ever that global central banks have purchased a net amount of gold. As of the end of the third quarter, the official sector has purchased 400 tonnes of gold.
Asia’s top 10 holders are sitting on $3.5 trillion of US IOUs
Despite what’s on display in Beijing, Hong Kong and Singapore, Uncle Sam’s treasuries aren’t exactly on sale in your neighborhood money lender’s stock portfolio. In fact, the US has a grand total of about a dozen trillion dollars in treasury debt and about half of that is in the form of Treasury bills. The top 10 holders of Uncle Sam’s bills account for more than a quarter of the country’s total outstanding debt. That’s a lot of bling.
Among the world’s trillion dollar debtors, the US has the most exposure, followed by India, China and South Korea. That’s a lot of Uncle Sam’s money to bet on. The Fed’s newest chairman, Jerome Powell, isn’t in the business of lending it to Asians. That’s a shame, because Asia’s top 10 US IOU holders are sitting on more than a quarter of a trillion dollars in Uncle Sam’s bills. The name of the game is to keep the bankers at bay.
Central banks are not unloading their gold holdings in the market
During China’s Lunar New Year holiday, jewellery sales were much higher than in the previous year. This is a sign that demand is increasing, as is the price of gold. This is a sign that China is in a recovery phase, and should prevent further falls in the price of gold and other precious metals mentioned here https://bestpreciousmetaliras.org/.
The World Gold Council announced that central banks bought a record 399 tonnes of gold in the third quarter of 2022. This was a significant increase over the previous quarter, and indicates that a large amount of demand is coming from central banks.
The US holds the largest portion of global gold reserves, with 8134 tonnes. However, if China were to announce that they had large holdings, it would be a major challenge to US supremacy. This would also create an unwanted surge in the price of gold.
Gold has been regarded as a safe asset during turbulent times. This is because it can be used as a hedge against inflation. The flight to safer assets has also driven demand for gold this year. In order to achieve a full recovery, gold imports will have to increase in 2019.
A number of Central Banks have been buying gold in recent months. This has included India, Turkey, and the United Arab Emirates. These countries have all bought 20 tonnes or more in a single transaction.
China’s efforts to challenge dollar dominance by creating a new reserve currency
Among the major concerns for the Chinese government is the vulnerability of its financial system to US dollar hegemony. This is exacerbated by US interest rate hikes, which have led to discussions in China about establishing the yuan as a strong reserve currency.
The US dollar has been the world’s sole reserve currency for more than 70 years. However, it’s increasingly being challenged in international payments. Chinese leaders have talked for two decades about reforming the global financial system. They’ve also expressed a desire to create alternative systems to hedge against U.S. hegemony.
The Chinese government has invested substantial capital in trying to build a global reserve currency. The Chinese yuan is already the eighth most traded currency in the world. It also has the potential to play a larger role in the multipolar financial world. The Chinese government has utilised offshore markets to internationalise the renminbi through the Belt and Road Initiative.
The Chinese government is also working with like-minded countries to develop a new global reserve currency. This would be based on a basket of currencies from the BRICS group of nations. This could rival the US-dominated alternative in the IMF.