China Knows the Future is Gold!
Among the iconic motion-picture lines of all time, ones most recognize, are “I’m your father,” from Star Wars; “You’re gonna need a bigger boat,” from Jaws. In the movie The Graduate the advice given to Dustin Hoffman’s character was, ““I want to say one word to you. Just one word. Are you listening?
“Plastics.”
In a Chinese remake of the film today it would be “Just one word. Are you listening?
“Gold.”
China is serious about gold. Through August this year, China has imported more than 1,000 tons of gold to meet its investment demand.
Buyers in China are aggressively taking advantage of the pullback in gold prices this year.
It’s not just private sector investment demand, either. China’s central bank remains on a gold buying streak, too. And not only is China the world’s largest gold buyer, but it is also the world’s largest gold producer as well.
Meanwhile Bank of America analysts have calculated that under-allocated central banks will need to acquire a lot more gold, more than 20,000 tons, “to reach what it views as an efficient reserve allocation.”
Investing.com:
[BofA] uses a framework under which gold accounts for 30% of total reserve assets, the level at which its commodities team estimates the information ratio of an average central-bank portfolio is maximized.
On a global basis, central banks would need to purchase just under 2,300 tons to reach that threshold, equivalent to roughly two years of buying at recent rates.
The potential is much larger when central banks already holding at least 30% of reserves in gold are excluded. BofA estimates the remaining institutions would need to acquire about 20,333 tons to reach the target, representing more than two decades of purchases at the recent pace.
China has the largest potential shortfall among individual central banks below the threshold. BofA estimates China would need another 5,628 tons, compared with 1,866 tons for Japan and 1,192 tons for Switzerland. Taiwan, South Korea, Saudi Arabia and Singapore would each require more than 700 tons.
I want to say one word to you. Just one word.
Are you listening?
Gold.
Never Miss the Real News!
Get all the news from the week sent to your inbox
Your privacy is very important to us. We will never sell your information. We deliver the news posted each week, and nothing more. Easily unsubscribe any time.
