Is Beijing Signaling An Imminent Currency Devaluation: China Unleashes Gold Buying Spree

Sunday, April 7, 2019
By Paul Martin

by Tyler Durden
Sun, 04/07/2019

Last week we showed how, in a time when reserve managers are actively selling a modest if notable amount of their dollar reserve holdings and replacing them with everything from the yen, to the euro and yen, the one country that has decided it will no longer be part of the USD monetary sphere of influence, is Russia, which has been dumping dollars and buying gold at the fastest pace in decades.

Yet while Moscow’s appetite for gold, which has doubled Russia’s international gold reserves over the past three years, remains unparalleled, Beijing has also quietly joined its northern neighbor in casting a smaller if just as material vote of no confidence in the dollar: overnight, the PBOC reported that the world’s second-largest economy added to its gold reserves for the fourth straight month, adding to recent speculation that central banks globally will continue to build holdings even as they dispose of their US dollar reserves.

According to the latest Chinese reserve data, the country’s gold reserves rose to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website. This was the fourth consecutive month of gold increases: last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December. As shown in the chart below, the recent buying spree resumed after a 25 month hiatus, as China stopped reporting gold purchases in October 2016. This trend broke in December, when Beijing announced it had once again started accumulating gold.

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