The global trade wars are certainly getting the media's attention, but looking a little deeper, is something else going on? Now China seems to be following Russia's long term financial game plan of reducing U.S. dollar holdings and increasing gold reserves. China is reported to have bought over 70 tons of gold since the end of last year having not increased any gold holdings previously in over two years. Meanwhile, Russia added over 270 tons of gold last year and another 78 tons this year. Both those countries have also been actively "dumping" dollars. No wonder gold has been outperforming most G-10 currencies as the trade wars intensified.
So what's the big deal? Lets speculate. Several years ago Brazil, Russia, India, China and South Africa (BRICS) 'dabbled' with the idea of forming a new gold backed currency to diversify away from the dollar. Could these trade wars rekindle those thoughts? Could using sanctions as a form of "punishment" lead to a multiple nation gold backed cryptocurrency to circumvent sanctions? Russia has already been a big buyer of bitcoin.
Could these global trade wars and the use of sanctions be the catalyst to encourage a new asset backed cryptocurrency to replace the dollar?
Just thinking and speculating. A bit more below.
Bill Taylor/Fintek Capital
"Gold prices rallied to six-year highs last week and continued posting gains on Monday at $1,403 per ounce. China boosting its gold stockpile, to shift away from the US dollar, has added to the precious metal’s resurgence.
The People’s Bank of China has purchased more than 70 tons of gold since December, according to the World Gold Council (WGC). Before that, the Chinese central bank had not reported an increase in gold reserves for more than two years, and the official figures remained unchanged from October 2016 to November 2018.
The increased gold purchasing by Asia’s top economy comes at a time when global central banks are accumulating the precious metal in record numbers. Russia has been the top buyer, adding about 274 tons to its reserves last year. In the first 5 months of 2019, Russia added 78 tons to its coffers, increasing the metal’s share in its international reserves by 3.7 percent.
Gold reserves of central banks around the world surged by 651.5 tons, or 74 percent year on year, in 2018, showed data from the WGC.
Analysts say Beijing was doubling down on gold “to diversify its reserves” away from the greenback. The country has been selling off US Treasuries lately, with its holdings having plunged from the peak of $1.32 trillion in late 2013 to about $1.1 trillion in April.
China’s latest boost to its gold holdings comes amid the protracted trade dispute with the US..."
Full Story at GlobalVillageSpace.com