EDITOR NOTE: China is importing around $8.5 billion of gold this month--a move that may elevate gold prices well above the international average, potentially a gold boom. Nevertheless, it’s important to realize what’s happening in China with regard to gold. As China gets ready to internationalize the first CBDC for cross-border transactions--its long-awaited digital yuan--the country may be gearing up to back its currency with the yellow metal. Not only might this bolster the yuan’s stability, but it may also elevate its status worldwide as the most reliable currency to hold--one that’s far more stable than the US dollar. This increases the likelihood that the digital yuan may dethrone the US dollar as the world’s reserve currency. Dollars may no longer hold the same value and privilege it enjoyed for nearly a century, which is of serious concern to Americans who hold nothing but dollars. The digital yuan may prove to be a more dynamic and efficient currency in international trade. But what may give it its ultimate value is the gold that backs it. In short, now’s the time to purchase non-CUSIP gold and silver, if only to hedge the decline that the US dollar is fated to undergo.
China is one of the largest gold consumers in the world, but the pandemic has put the market in turmoil as supply couldn’t match. This has elevated domestic prices high above the international rates. However, China has permitted banks to import Gold into the country. This could be a boom to world gold prices as the country plans to invest $8.5 billion into imported gold in April for April and May supply. Vaccines and stimulus have halted Gold's growth as of late but a fundamental shift from a major bullion consumer might turn the market bullish.
FINSUM + Magnifi: Macro factors have been in gold’s favor in theory but in practice, the price hasn’t budged. However, legal changes to import laws would change the landscape for the precious metal.
Original post from Magnifi