Chinese Gold Holdings Swell

At the time of this writing, Comex Gold ended the day at $1,287.80, hovering at its six-month highs and showing signs of a strong uptrend. Comex Silver closed at $17.58, continuing its four-week rise, and well above its six-month low of $15.94.

Already the world’s biggest gold market, China is loading up on even more gold as investors seek to protect themselves from impending economic risks.

Later this year, 1,000 metric tons of gold are expected to arrive through Hong Kong and into the mainland. A notable increase from 2016’s net purchase of 647 tons, China’s import level marks its highest since 2013.

According to Haywood Cheung, president of the century-old Chinese Gold & Silver Exchange Society, concern over equity and bond markets, slowing property market, and bearish Yuan outlook have prompted Chinese investors to seek safety in the yellow metal.

Gold bullion sales have dwarfed those of gold jewelry.

The type of surge in consumption clearly indicates the level at which safe-haven demand has far surpassed that of accessories. In the first quarter alone, gold bar sales have climbed to more than 60% while jewelry sales have risen only 1.4% according to the China Gold Association.

Based on data from the Swiss Federal Customs Administration, Swiss gold imports have topped 100 tons from January to April. This follows a total import of 442 tons from the country in 2016, which is a 53% increase from the previous year.

China is aggressively buying the gold that its rivals in the West are dumping into the markets…a smart move that should cause the West some concern.

Consider the following:

● China and its partnering countries in the Shanghai Cooperation Organization are looking to free themselves from the shackles of the US Dollar by backing its own currency–the yuan–with gold.
● China is currently offering an offshore gold investment product denominated in yuan.
● Russia’s central bank has opened an office in Beijing for the purpose of facilitating gold transfers into China.
● China is experimenting with blockchain technology to develop its own national virtual currency–the ChinaCoin; a move that, while not involving gold in its current ideation, is a means of shaking off US dollar dependence.

If you consider these moves carefully, it becomes evident that strategic efforts to bypass the US dollar and subvert its global status as a reserve currency are well underway.

But what’s impressive is the foresight and collective actions demonstrated by China’s citizens: while the Chinese government is accumulating gold as part of its strategic long play, its citizens, aware of the fragility of their current economic situation, are proactively loading up on gold as a safe haven.

Let’s back up for a moment. In 2016, China’s gross debt to GDP was at 22.4%, while ours in the US was 104.8%. What does this tell us?

The fragility of our own domestic economy is far worse…and yet we’re letting China gobble up the very thing we need!

Let us not exhibit such a lack of foresight, especially when the build-up toward an economic collapse is both slow and far too obvious.

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