[New Tang Dynasty News, Beijing time, March 09, 2024]The Central Bank of the Communist Party of China has been buying gold internationally for 16 consecutive months, pushing up the price of gold soaring, making many mainland people wary of “buying gold in troubled times” and “increased gold prices mean war.” “.
Gold skyrocketed and someone realized 2.89 million yuan in cash overnight
This week, international and domestic gold prices have been rising steadily, setting new historical highs. On March 7, the spot gold price in London exceeded US$2,160 per ounce, and the COMEX gold futures price once reached US$2,172.2 per ounce, both setting new historical highs and setting new closing highs for five consecutive trading days.
In terms of domestic gold prices in China, as of the close on March 7, Shanghai gold rose 1.24%, with the price rising to 505.88 yuan/gram, setting another record high. The retail price of gold in Chinese gold stores also continues to soar, with gold prices generally ranging from RMB 657 to RMB 660 per gram.
A salesperson at a jewelry store in Hangzhou’s Hubin business district lamented among his customers, “Witnessing history every day.” From Monday (4th), it was 636 yuan/gram to Friday (8th), which was 660 yuan/gram, an increase of 24 yuan in a week. I’ve never encountered such a situation before.
This wave of rising gold prices has made many Chinese investors feel like they are on a roller coaster. The person in charge of a gold recycling company in Hangzhou said that he received a 6 kilogram gold bar from a customer a week ago and cashed it in for 2.89 million yuan. However, a week later, he lost 140,000 yuan. “I regret it for him.”
Experts from the central bank’s increase in gold holdings in 16 months: There are three major reasons
Gold’s surge is related to the People’s Bank of China’s continued purchases of gold. On March 7, while China’s gold price hit a record high, the central bank announced blockbuster data. As of the end of February 2024, China’s gold reserves were 72.58 million ounces (approximately 2,257 tons), an increase of 390,000 ounces from the previous month, and 7,219 at the end of January. million ounces.
This is the 16th consecutive month since the central bank restarted its holdings increase in November 2022 to February 2024 that it has increased its holdings of gold reserves. According to Wind data statistics, this is the longest period of continuous monthly increase in holdings by the central bank since data is available, during which the cumulative increase in holdings reached 9.94 million ounces (approximately 282 tons).
The CCP’s gold buying spree for 16 consecutive months has aroused concern and doubts from the international community. Tang Hao, a senior media person, once analyzed in “Crossroads of the World” that the Russia-Ukraine war and the Israel-Kazakhstan war prompted international funds to buy gold as a safe haven, and the Chinese Communist Party continued to buy gold aggressively, pushing up the international gold price.
According to statistics from the World Gold Council, the CCP is currently the world’s largest gold buyer, with a cumulative purchase of more than 200 tons of gold. A gold dealer in Singapore revealed that the CCP spends at least US$1 billion on gold purchases every month.
As of February this year, China’s official gold reserves have reached 2,257 tons, exceeding the total of Latin America, Africa and India.
Tang Hao said that the CCP’s actual gold reserves are definitely more than this. Because China itself is the world’s largest gold producer and is frantically shopping for goods internationally, the gold hoarded by the CCP is definitely much higher than the data published to the outside world.
He analyzed that there may be three major reasons why the CCP is desperately buying gold.
1. Preparations for the invasion of Taiwan
Tang Hao said that almost all international media first suspected that the CCP was hoarding gold so desperately in preparation for sending troops to the Taiwan Strait. Because before Russia invaded Ukraine last year, it also swept up gold in the international market as a financial reserve after the war.
Because as long as the CCP launches a war, it will be subject to international sanctions like Russia, and the RMB will depreciate wildly. Therefore, one possible motive for the CCP’s crazy buying of gold is to prepare for war and use it to circumvent international sanctions in the future.
2. Depreciation of the RMB and hoarding gold to preserve financial resources
China’s economy has deteriorated, and the real estate market, stock market, foreign exchange market and bond market are in a dilemma of “all four markets”. Chinese assets denominated in RMB have also continued to depreciate. Tang Hao said that the CCP is rushing to hoard gold. On the one hand, it is to preserve the value of its financial resources. On the other hand, it may also increase its value. Because the international situation is becoming more and more chaotic, the market’s demand for gold as a safe haven will also increase.
3. The housing market collapsed and unemployment was severe, so people bought gold as a safe haven.
China’s economy is in recession, the real estate market has collapsed across the board, and there has been a wave of bankruptcies, unemployment, and layoffs. Many people are worried about suddenly losing their jobs and income, so they are buying gold to preserve their value. Especially many young people who have just emerged from society, due to limited funds, have started a craze of “buying golden beans”. A golden bean weighs about one gram and costs only four to five hundred yuan, attracting a large number of young people to snap up and invest.
Tang Hao said that the strong demand for safe haven among the people has also prompted the Central Bank of China to purchase gold in large quantities.
Regarding how to buy and invest in gold rationally, some jewelers said that everyone can pay attention to the dynamics of the central bank. If the central bank no longer purchases gold in the future, it is recommended that investors leave the market directly.
“If the price of gold rises, a war will begin.”
The skyrocketing price of gold has also alarmed many Chinese people. Some people analyze that it may be because the stock and real estate markets are weak, so investors are speculating in gold.
There are also many people who believe that rising gold prices are an ominous sign based on their life experiences: “Buy gold in troubled times.” “Rising gold prices are a precursor to war.”
“Historically, when the price of gold rises, it means there is going to be a war.”
“I would rather keep gold than exchange it for paper money. When currency inflation occurs, paper money will become worthless.”
“Gold is valuable at all times, especially in war.”
“You can take it with you when you flee, but you can’t take away fixed property.”
“Beware of the chill behind the surge in gold prices.”
(Comprehensive reporting by reporter Luo Tingting/Editor in charge: Wen Hui)
2024-03-09 15:10:07
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