Is China Back In the Gold Market for the Long Term?

China left the gold market and was either making stealth acquisitions of official physical gold and upon their re-entering the gold market announced they were adding 1,500+ tons to their official gold holdings. They remained in the gold market for more than year and it appeared China would be acquiring physical gold for some time, however, as soon as China was granted entry into the SDR basket of currencies regulated and issued by the IMF, they abruptly cut off their acquisitions. This happened in October 2016 and only re-entered the gold market, again, in December 2018.

China has now acquired gold for the past four months for a total of more than 42 tons of physical gold during that time. The March numbers have just been released and while their acquisitions are on par with the numbers from 2015/2016 it does not account for the gold they are receiving from Russia, which could be as much as an additional 8 tons per month or said another, approximately two thirds the volume China has added during the last four months.

The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website on Sunday. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.

China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018. Source

It will be interesting to see how much longer this latest pattern continues. Did China intentionally leave the gold market to allow Russia to not only gain on their position in official global gold reserves? We gave up on coincidence’ decades ago and now that Russia has not only gained on China as a major gold holding nation Russia and now China, are both continuing to climb the ladder and if both nations continue to stockpile gold they will catch and surpass Italy by mid 2020, if not quicker.

Another interesting twist is Italy demanding the central bank turn over the “peoples gold” back to the people. Of course the central bank is not willing to do this as the central bank see the gold as belonging to them. This could blow the global gold scheme to shreds. It Salvini continues pushing for the gold and demands an audit, what will he find? WOW!  Gold is now a lot more interesting than it has been over the past 5-6 years. Got physical close at hand?