China is Buying the Dip
What to do during the gold price correction!
China’s acquisition of gold is unrelenting. It has been taking advantage of gold’s price correction while it can.
The People’s Bank of China report adding a record 14.93 tons of gold (480,000 troy ounces) to its reserves in June. That is the largest monthly purchase since October 2023. It marks the 20th consecutive month of increases.
Total official reserves reached 2,346 ton (75.44 million troy ounces).
To put that in perspective, note that in May, the prior month, the central bank bought 9.95 tons. June represents a 50 percent increase. It represents aggressive buying during the gold price correction.
China remains the world’s largest gold producer by a clear margin, with no major shift in its dominant position:
The long-term prosperity of the Chinese people is not merely a matter of how much gold the government has. The Chinese government and PBOC actively support retail and investment demand for physical gold (bars, coins, and exchange-traded products). For example in 2024 a PBOC campaign urged citizens to buy physical gold as a safe-haven alternative amid real estate challenges.
Other measure China is taking make owning physical gold more accessible to the people, for example lowering entry barriers, and extending the trading hours on gold platforms.
That stands in sharp contrast to the United States which has long had policies to discourage the ownership of gold by its citizens. Washington correctly sees gold as a competitor to dollar hegemony. Nevertheless it continually pursues policies like dollar sanctions and expropriation that make foreign dollar ownership vulnerable.
We suggest that if Washington really wants to protect the dollar, it will have to do something dramatic about its spending and already unsustainable debt. This it will not do.
Which is why China’s dollar reserve have tumbled sharply, and its gold holdings keep climbing. It is not looking at the next quarter. It is looking at the next year and the next decade.
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