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China De-Dollarization Pushes Into Hyperdrive, Adds 100 Tons Of Gold Amid Trade War Chaos

China De-Dollarization Pushes Into Hyperdrive, Adds 100 Tons Of Gold Amid Trade War Chaos

By: Christine von Liederbach
October 8, 2019
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Article by Tyler Durden in Zero Hedge

As the trade war continues to escalate, China’s rapid move towards de-dollarization continues. China added more than 100 tons of gold to its reserves since December 2018 and has also been divesting US Treasuries. 

Bloomberg reported the People’s Bank of China acquired 188,800 ounces, or about 5.9 tons of gold in Sept., raising total holdings to 62.64 million ounces in September from 62.45 million in August. Over the last nine months, China added a whopping 100 tons of gold to its reserves as a hedge to a deepening trade war. 

Gold jumped to a six-year high in September as economic turmoil across the world is pointing to a global trade recession in 2020. Central banks have been leading buyers of the precious metal, especially ones based in emerging markets. Gold purchases by China and central banks will continue through 2020, Bloomberg notes, as protectionist policies spurred by the Trump administration have blown up global supply chains and will continue to produce volatility in global equity markets for the foreseeable future. 

“Given strained relations with the US, China needs a hedge against its large holdings of the dollar, and gold serves that function,” said Howie Lee, an economist at Singapore-based Oversea-Chinese Banking Corp.

“As China becomes a superpower in its own right, I expect more gold-buying.”

Last month’s purchases boosted the People’s Bank of China’s gold reserves to 62.64 million ounces. As shown below, Comex Gold futures tend to rise when China is adding.

The Chinese continue to add gold to their reserves to reduce their exposure to the dollar. As one analyst told Bloomberg in August, “It is important for the country to diversify away from the US dollar. Over the long run, even relatively small-scale gold purchases add up and help to meet this objective.”

 To read this article in Zero Hedge in its entirety, click here.

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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.
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