Best looking weekly chart, page-2088

Plenty of steam, building in the boilers.

China bought gold in record amounts, purchasing 735 tonnes last year, up 23% over a year ago, and became the fifth largest holder, purchasing gold for 18 months in a row. In contrast, China’s holdings of US Treasuries fell more than $400 billion to a 14-year low of $775 billion, down from $1.1 trillion in 2021. Gold now makes up around 4% of China’s reserves, up from 2.9% in 2019. As Chinese citizens surpass their Western counterparts in their influence on the bullion market, the Shanghai Gold Exchange has emerged as the largest physical dealer in the world in the meantime. The first quarter saw a 6% increase in the amount of gold consumed by Chinese consumers, who imported 367 metric tonnes in the first two months of this year—a 51% increase over the previous year.

We believe fiscal, monetary and geopolitical uncertainties have driven investors into gold as an alternative currency, or the classic store of value. Gold is in limited supply in contrast to the fiat dollars which are in unlimited supplies or cryptocurrency which could be made or seized with a click. Gold is universally fungible and finite. Gold can be bought and sold in US dollars and thus is an alternative to fiat money for both central banks and investors, particularly since gold is also outside the Western based system. The Saudis are selling oil for yuan, and China has grown to be their biggest consumer. This signals a fundamental shift in power from the West to the East, with the petroyuan taking the place of the petrodollar. Dollars are being utilized less and less as bullion gains a greater percentage of the reserves held by central banks worldwide. For China, gold is the new critical mineral. We continue to believe gold will reach $3,000/oz within 18 months.