China’s gold reserves continue to grow as trade war strains economy
China’s gold reserves continue to grow as trade war strains economy Liam Sheasby for Bullion by Post
Official data from China’s Central Bank shows that the country has now added 99 tonnes of gold to the nation’s reserves as of the end of August, worth an estimated $7.574 billion.
This brings China’s total holding of gold to 62.45 million troy ounces (2,141 tonnes); a 5% growth of their gold holdings since they officially resumed buying bullion in December last year.
The newly-added gold puts China’s foreign exchange reserves up by over $3 trillion, even when accounting for the trade war pressures on the Yuan, and the World Gold Council reported in July that central banks across the world had added around 374 tonnes of gold to their reserves, with Russia and China at the heart of that buying spree.
Given that gold has made 12.48% gains in the past three months in Dollar terms, and 25.06% for the past year, it’s unlikely that the People’s Bank will slow down its hunt for buying gold – especially when they are keen to avoid the US Dollar in their reserves, and will have little interest in the fragile Pound Sterling or Euro currencies.
Gold is currently around $1,500 per ounce, with trade war uncertainty the chief driving force for gold’s good run over the past 12 months. Factor in Brexit, the fragile Italian coalition and their nation’s debt problems, debt in China, debt and currency weakness in Argentina, a likely recession in Germany, missile testing in North Korea, tensions in the Gulf… all manner of things could destabilise the global economy beyond the already-visible slowdown in economic performance.
Some experts have praised China for their action, with Peter Schiff of Euro Pacific Capital telling Fox Business that countries like China and Russia “can read the writing on the wall”.