Max Zhang’s Post

Gold prices are on the rise, but why? The World Gold Council reports that China's gold purchases surged by 33% in the first quarter of 2024, coinciding with a reduction in their purchases of U.S. Treasuries. This trend is primarily driven by the actions of China's central bank, which saw record-high net purchases of gold in 2023, totaling 225 tonnes. Moreover, global central banks collectively acquired 1,037 tonnes of gold on a net basis last year, indicating a broader trend beyond China. Central banks, including China's, are reacting to the growing instability of major reserve currencies, notably the U.S. dollar. Rising debt levels, coupled with no concrete plans to address them, are raising concerns about the sustainability of economies. The increasing interest rates are amplifying the cost of servicing government debt, potentially surpassing tax revenue in the near future and leading to a currency crisis. In response to these economic uncertainties, central bankers are turning to gold as a hedge. This strategic shift is driven by the recognition that traditional reliance on fiat currencies alone may not suffice in tumultuous times. China's burgeoning middle class is also playing a significant role in driving up gold demand. Traditionally, Chinese middle-class individuals invested in real estate, but with plummeting property values and a stagnant stock market, gold has emerged as an attractive alternative. The ease of access to gold through jewelry shops, mobile apps like WeChat, and platforms like the Shanghai Gold Exchange has further fueled this trend. As real estate and stocks falter, more Chinese citizens are likely to turn to gold as a stable investment option, leading to continued growth in gold demand in the region.

Lets talk about the gold rush what should investors do now 🤔 🪙global central banks are buying gold in large amounts and china is at the epicentre of this buying as we know 🪙China's central bank purchased gold for its reserves for a 17th straight month in March But why is china buying so much gold ? 🪙china is clearly trying to diversify its central bank holdings to reduce dependence on the US dollar. 🪙China has been reducing its dollar holdings and it has dropped by a third since 2011 so Why is China reducing its dollar holdings ? 🪙reports suggest China's gold buying spree is driven by a “desire to weaken” its dependence on the US dollar as a reserve currency after Washington “weaponised the greenback” in its sanctions against Russia. 🪙So Chinese leaders are worried about such curbs if it decides to flex its military muscle The big question is this ? if Countries globally are trying to reduce their reliance on the dollar as a part of their foreign reserves , could this be the start of a tectonic shift in the global power centre shifting away from the west and into the east ? 🪙The world gold council analysts expects central bank purchases to continue for several years signalling that diversification away from the dollar is far from over. Chinas gold reserves are still only 4% of the total reserves But should you be buying gold now at this price? ➡️ some caution is prudent because this price surge is also driven by speculation therefore better to not chase the performance now.

Recently there was some news that GOLD ETFs in china were trading at a 20% premium to the underlying. Lets talk about the gold rush. Global central banks are buying gold in large amounts and china is at the epicentre of this buying as we know. China's central bank purchased gold for its reserves for a 17th straight month in March But why is china buying so much gold ? China is clearly trying to diversify its central bank holdings to reduce dependence on the US dollar. China has been reducing its dollar holdings and it has dropped by a third since 2011 So why is China reducing its dollar holdings ? Reports suggest China's gold buying spree is driven by a “desire to weaken” its dependence on the US dollar as a reserve currency after Washington “weaponised the greenback” in its sanctions against Russia. So Chinese leaders are worried about such curbs if it decides to flex its military muscle The big question is this ? if Countries globally are trying to reduce their reliance on the dollar as a part of their foreign reserves , could this be the start of a tectonic shift in the global power centre shifting away from the west and into the east ? The world gold council analysts expects central bank purchases to continue for several years signalling that diversification away from the dollar is far from over Chinas gold reserves are still only 4% of the total reserves. But should you be buying gold now at this price? Some caution is prudent in my opinion because this price surge is also driven by speculation therefore better to not chase the performance now.

𝐓𝐡𝐞 𝐮𝐩𝐰𝐚𝐫𝐝 𝐭𝐫𝐚𝐣𝐞𝐜𝐭𝐨𝐫𝐲 𝐨𝐟 𝐠𝐨𝐥𝐝 𝐢𝐬 𝐚𝐧𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐞𝐝 𝐭𝐨 𝐠𝐚𝐢𝐧 𝐦𝐨𝐦𝐞𝐧𝐭𝐮𝐦 𝐟𝐨𝐥𝐥𝐨𝐰𝐢𝐧𝐠 𝐭𝐡𝐞 𝐅𝐞𝐝𝐞𝐫𝐚𝐥 𝐑𝐞𝐬𝐞𝐫𝐯𝐞'𝐬 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐭𝐨 𝐥𝐨𝐰𝐞𝐫 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐫𝐚𝐭𝐞𝐬. Gold's recent surge has been fueled by substantial investments from China, consistent acquisitions by central banks, and Western investors hedging their bets through options. However, the sectors traditionally responsible for sustaining such uptrends have shown a lack of vigor: the volume of assets managed by gold-backed ETFs has seen a decline, and the net positions of non-commercial traders have not shown significant movement. It's our perspective that the market is in anticipation of rate reductions; following such adjustments, we expect a wider spectrum of investors to engage in gold purchasing, potentially elevating the precious metal's value. Moreover, an uptick in Western interest could play a crucial role should the investment climate in China shift towards lesser gold investments. We project that gold will keep on making new highs for sometime. Central Banks and Chinese Investments Bolster Gold Prices: Despite the global trend of tightening monetary policies by central banks, gold prices have remained stable, supported by persistent demand from certain quarters. Notably, central banks have continued to augment their gold reserves, a trend prominently observed in China, where the PBOC has been notably increasing its gold holdings.

China's central #bank to return to #gold buying as prices ease After adding to its gold reserves for 18 consecutive months, official data from the People's Bank of #China (PBOC) showed its holdings were unchanged in May, sending global #spot prices down sharply on Friday. Benchmark spot gold traded around $2,300 per #ounce on Monday after its biggest daily drop in 3-1/2 years in the wake of China's data on holdings. The market hit a record $2,449.89 per ounce on May 20, driven by #interest rate cut expectations and firm central bank buying, fuelled by #geopolitical tensions. https://lnkd.in/d-qxsTfA #oro

China : Go On Gold Buying Spree 🤔 It’s an old asset, but it ain’t getting older It’s pretty obvious that gold always be a good friend of uncertainties as it delivers the hedging capability of our asset. For me, there’s no doubt for the central bank to maintain its huge appetite for gold during 2022 until 2023. ✍ Worth to note that gold is such an important component of central bank reserves due to its safety, liquidity and return characteristics. Based on World Gold Council website (https://lnkd.in/g96KyfYX), there are 3 important facts to know :  👉 Central banks reported adding 77t of gold to global reserves in August.  👉China - Poland - Turkey acted as buyers and there’s no massive sales during the month. 👉Heading into 4Q23, the central banks remain on course for a strong annual total. One of the central banks that recorded  a sizeable buying is coming from the People’s Bank of China (PBoC). The PBoC reported its gold purchase for 1H23 accounted for 353 tonnes. ✍ As cited by Bloomberg (https://lnkd.in/gA2rtDvR),  China has added to its gold reserves for an 11th straight month in September when a surge in local gold premium drew the market attention. FYI, the PBoC’s bullion rose by 840kt ✍ Some economists place its best guess that the PBoC is currently holding 5,029mt of gold in total and make China as the 2nd largest official gold reserve country after US. 🤔 Geopolitical tensions may lead to break new ATH soon? The tensions in the Middle East is still escalating, coming from the Israel’s attack to Palestine (Hamas). The geopolitical turbulences took a place some days before the FOMC minutes and poured more volatility into the market.  🆙 Thus, the rise in the risk perception leading to the surged of demand for safe haven asset and the perfect name is gold, isn’t it? The price bounced to USD 1,862/oz and jumped 1,67% in a day. 🤔 Could we meet USD 2k/oz? Why not? There’s always a chance for gold to reach that level as long as there’s a strong demand from the central banks. Not to mention that BRICS (it has 11 members now) will stand as huge buyers. BRICS need precious metals to support its currencies and reduce (or even shift away) from USD a.k.a Greenback which has served as the global foreign reserve currency for about a century.   At this short writing, I don’t talk deeply about BRICS’ mission as my main goal is highlighting the possibility of gold to achieve its new ATH. So, do you also join this gold bandwagon? Or do you find any other safe haven names for your investment portfolio? Share your thoughts pls :) Source : Bloomberg,Gainesville Coins, Investing.com #gold #investment #hedging #economy #safehaven #centralbanks #brics

China has snapped up a huge amount of gold for 16 months in a row, which helps the country reduce reliance on the US dollar.📊 The People's Bank of China added roughly 390,000 troy ounces of the key metal in February, according to government data cited by Bloomberg. On Thursday, the price of gold hovered at a record high of $2,161.90. It's up 5.25% in the last five days, and 18.77% in the last 12 months. The World Gold Council reported that central banks bought 1,037 tons of gold in 2023, just below the all-time record from 2022. Central bank buying activity has helped the commodity's rally, but recently traders' expectations for rate cuts from the Federal Reserve have also helped fuel price gains. China's move to build up its coffers with gold, which other central banks around the world have also made over the last year, points to its continued push toward diversifying its holdings, with the goal of becoming less reliant on the US dollar. The country is part of the BRICS economic bloc — Brazil, Russia, India, China, and South Africa — which has shared ambitions to cut into the global dominance of the greenback. Full story on Business Insider: https://lnkd.in/gmAE5xY7

Gold price is influenced by factors like dollar strength, potential recession, inflation, and the future trajectory of interest rates. For most of the year, gold and equities maintained their correlation, with gold notably outperforming during the onset of the U.S. banking crisis. Gold has experienced significant volatility recently. In March 2022, the start of the Russia-Ukraine conflict saw the gold prices jump to a high of $2,069 before a steady selloff brought prices down to nearly $1,600 in September 2022. In March 2023, following the collapse of Silicon Valley Bank in the U.S., gold rebounded robustly, breaking the $2,000 threshold to register a new high, before shedding some of its lustre. The yellow metal currently faces an array of tailwinds that could potentially propel its price upward, counterbalanced by headwinds that could exert downward pressure. https://lnkd.in/getDfbCM

China Buys 23 Tons Of Gold In 9th Straight Month Of Purchases, Total Rises To Record 2,137 Tons Not only is China ravenously buying up all the physical gold it can get its hands on - something it has been doing pretty much non stop since 2009, for the most part covertly with occasional periods of public disclosure meant to achieve specific political goals - more importantly, it is letting the world know it is buying up all the physical gold it can get its hands on. On Monday, the Chinese central bank revealed that in July it increased its gold reserves for a ninth straight month as central bank purchases - in big part out of China - continue to underpin the price of the precious metal, offset selling by ETFs. The bullion held by the People’s Bank of China rose by 740,000 troy ounces, or about 23 tons, bringing the country's total stockpile to a record 2,137 tons, with around 188 tons added in a run of purchases that began in November. What China's true purchases are, however, remains a mystery and will be revealed only when Beijing is ready with whatever it has in mind next for its currency. As we reported previously, China has led central bank buying of gold in 2023 as it continues to diversify its reserves away from the weaponized US dollar. That’s helped keep prices buoyant despite rising interest rates around the world, which typically sap demand for non-interest bearing bullion. One can only imagine what will happen once rates start diving and when the exponential increase in US debt forces the Fed to resume monetizing it. Official purchases are key to the outlook for prices this year, according to the World Gold Council. The industry body expects central banks to keep adding to their holdings, although at a slower pace than last year when demand surged in the hunt for alternatives to the dollar after the US sanctioned Russia’s reserves following its invasion of Ukraine. Meanwhile, the PBOC also reported that China’s total foreign currency reserves rose by $11.3 billion to $3.204 trillion in July, up 3.2% on the year and 0.4% on the prior month, and higher than the $3.193 trillion consensus estimate.

Prod-EP-02.02-B2-S-Chars=1647 Gold demand hit record highs in 2023 as persistent geopolitical tensions and weakness in China’s economy pushed investors toward the safe haven asset, the World Gold Council said in report. Total gold transactions stood at 4,899 tons last year compared with 4,741 tons in 2022, inclusive of over the counter deals as well as stock flows that reflect changes to inventories on commodity exchanges. Unlike trading conducted by an exchange, OTC transactions take place directly between two parties. The biggest drivers of gold demand in 2023 were the Russia-Ukraine war and Israel-Hamas conflict as well as the slowdown in China’s economy — and these could continue boosting the metal’s prices well into 2024, said Shaokai Fan, head of central banks at WGC. Prices hit an all-time high of $2,100 an ounce in December as central banks as well as retail investors increased purchases of gold — central bank purchases have exceeded 1,000 tons for two consecutive years. “2023 was the second highest year in history of central bank gold buying, within a hair’s breadth of the record high in 2022,” Fan told CNBC in a Zoom interview. The report showed that the People’s Bank of China was the biggest buyer of gold at 225 tons last year, bumping up its stock to 2,235 tons. “If you as an individual will see that your own central bank is buying large amounts of gold, you’re at the very least more aware of gold … Or maybe you’re even influenced by the fact that your central bank is buying a lot of gold, you may think of gold as a personal investment as well,” Fan said. China’s real estate crisis has also pushed more investors toward gold, he highlighted.