With all the uncertainty our world is currently embroiled it is no wonder we see gold being acquired around the world by everyone that understands money, currency and corrupt banking / governments. For those still living in the matrix and feasting on lies, well, they see things in a completely different light.
We could offer up a myriad of reasons for adding gold to ones portfolio but if you have been following along you already have a good idea of what makes up the list. Let’s focus on a new piece of data that just hit the wire.
China’s ongoing trade spat with the United States is likely one of the major reasons for China’s gold purchase ramp up this year. Unlike more volatile assets such as equity and currency, gold is much easier to trade and it does offer relatively high returns.
The secretary to the executive of the board of China National Gold Group, Hou Songling, mentioned that China has been increasing its gold stocks since December of last year and there seems to be no sign that it will be slowing down. Source
In these two paragraphs we see two major reasons for gold to be on the rise – trade war between China and the U.S., China is not only acquiring physical gold in the open market, China decided a few years ago that acquiring gold mines would be in their best interest as well. Why pick up a brick or two when you can acquire all the bricks that will ever be produced from a particular source? The mining industry has been in serious trouble for the past decade so China sees this an opportunity to secure a supply of gold in the future.
In China, gold-related trading has also drastically increased. In the first six months of this year, gold-related trades on the Shanghai Futures Exchange have reportedly increased by 101 percent to $1.24 trillion. The values of gold-related transactions on the exchange reportedly also rose by 5 percent year-on-year.
According to the Ministry of Industry and Information Technology, the total volume of gold transactions for the period has increased by 88.3 percent year-on-year. The trade volume is roughly equivalent to around 30,200 tons of the precious metal. Source
Gold futures in China is a new situation and with the recently announced partnership with the CME we see this as being only the beginning.
Apart from trading, gold consumption in China has also apparently increased. This has partly been driven by a continually increasing demand for gold jewelry and items from consumers living in second and third-tier Chinese cities.
In the first six months of this year, gold consumption from the jewelry industry has increased by 2 percent year-on-year. This is equivalent to around 358.8 tons of the valuable metal.
According to the World Gold Council, governments have drastically increased their gold reserves this year. Aside from China, countries such as Russia, Turkey, and Kazakhstan have also drastically increased their gold reserves.
A report from the World Gold Council estimates that global central banks have increased their holdings by a total of more than 374.1 tons of gold in the first six months of this year. Source
This is the heart of the matter – massive gold movement on the worlds largest physical gold trading platform. From any view point, physical gold in China is being acquired hand over fist and in quantity. The above information pertains to both retail gold and central bank tonnage of gold. Gold is on the move in the East and the first six months of 2019 appear to be no-holds-barred gold consumption. What will the second half of 2019 look like as it morphs into the Chinese “red envelope” season combined with the wedding season of India to kick off 2020? WOW! We could easily see gold and silver moving up, up and away by March 2020.
