Gold is being purchased by Central Banks to soak up liquidity (and the inevitable hedge).
China keeps all of it's massive gold production and as they haven't let us in on what they hold I'd say their target is US$1.164 trillion. As of late have you noticed a regular bottom forming after a POG reduction. The Chinese are selectively creaming the market lows.
But they have made money out of these bonds having bought them over the years when the coupon rate was well above Tbill yields now.
They're not financial nuts, they're financial squirrels. I understand China is embarking on a huge gold accumulation drive knowing full well that as the USD depreciates (and despite attempts to appreciate the yuan) the ultimate holding will enable them to possibly control the gold price.
The US may have the reserve currency but China will have the biggest gold holding.
You could write a book about the secondary reserve currency.
