Sixteen Months and Counting: China Keeps Adding Gold

In case anyone thinks gold is a flash in the pan, and the U.S. dollar is as good as gold, let’s take a look at what China is doing:

Shanghai Media Group, China’s largest state-owned media conglomerates, reports:

The People’s Bank of China held 74.2 million ounces of gold at the end of last month, worth about US$ 387.6 billion, up 30,000 ounces from the end of January, according to data released by the State Administration of Foreign Exchange recently.

Since November 2024, the PBOC has raised its gold holdings by a total of 1.4 million ounces.

That makes 16 months in a row that China has increased its gold reserve. Looks like a trend to us.

China’s total foreign exchange reserves amount to US$ 3.4 trillion,

Its holdings of U.S. Treasury securities (bills, notes, and bonds) peaked at $1.317 trillion in November 2013. At that time the U.S. national debt was $17.1 trillion.

Chinese Gold Panda coin

Compare that to its position today. China’s Treasury holdings stand now at $683.5 billion — roughly half the 2013. So even as a major creditor of the U.S. has cut its exposure to our debt in half, our national debt has more than doubled to almost $39 trillion.

Think about that and you will understand why the Washington is in a mess. As its spending continues to shoot the moon, with no sign of doing anything but continuing, the world’s second largest powerhouse has backed away from the credit and geopolitical risk. But when you’re the biggest debtor in the world (the U.S.), you really need the biggest lenders in the world.

When Washington needs to borrow more, but creditors are scarce, what does it do to attract more of them? It has to raise interest rates. But wait! That means it costs more to service U.S. debt, and it slows the domestic economy which therefore reduces tax income.

That’s the rub.

But in a fix like that, Washington does have an alternative…

… PRINT!