Gold fever is gripping central banks. As always when geopolitical tensions are at their peak.
Gold
Central banks continue to accumulate gold. The World Gold Council (WGC) figures for September are very telling.
Gold reserves of global central banks increased by 77 tonnes in September. Gross sales (a single ton) were eclipsed by purchases (78 tons).
China swallowed 26 tonnes of gold, or nearly 180 tonnes in 2023. Knowing that the Middle Kingdom is also the world’s largest producer of gold. Poland is second on the podium with just over 100 tonnes this year.
A total of 337 tonnes were purchased by central banks in the third quarter. This is the third highest quarterly total in history after notably the 459 tonnes in the third quarter of 2022:
No central bank has sold gold since June. Overall, purchases have far exceeded sales since the start of the Russian special operation in Ukraine.
The WGC emphasizes in its report published on October 31 that net gold purchases by central banks were already 14% higher than in 2022 for the first three quarters.
Central banks have purchased 800 tonnes of gold since the start of the year. This is the highest figure ever recorded over three quarters. “The range of countries whose central banks have increased their reserves in recent quarters is wide”we can read.
Revolt against the dollar
These gold purchases are not the result of chance. They are the result of strong geopolitical and inflationary tensions.
The US Empire cannot accept that China has stopped accumulating its Treasury bonds (American public debt), and this since 2011. That is to say just after the Fed announced its second Quantitative Easing (QE)…
Accumulating gold allows China to place its trade surpluses in a safe haven. A wise decision when we see the marked drop in the value of US Treasury bonds since the Fed raised its rates to stem inflation:
The US public debt market has lost almost a quarter (25%) of its value since the Fed began raising its key rate, which is now at its highest level in 16 years.
This is still the biggest drop in the history of the American bond market. We have to go back to the 19th century to find a comparable decline.
This is how the rest of the world no longer wants to finance the lifestyle of Americans. Hence the announced ambition of the BRICS to trade more in their own currencies rather than in dollars.
If enough countries join the revolt, the dollar will eventually depreciate, in turn preventing the United States from parasitizing the entire world via its abysmal trade deficit.
Gold makes the bed for Bitcoin
With Russia taking over the BRICS presidency next year, the subject of dedollarization of international trade will come back to the forefront.
Indeed, let us remember that the Russian central bank still held the equivalent of 300 billion dollars/euros in reserves two years ago. So much money now “frozen” by the EU and the United States.
After sacrificing tens of thousands of soldiers in Ukraine, Vladimir Putin will not suddenly turn around. It is certain that it will encourage all BRICS member countries to redouble their dedollarization efforts. Especially since he has just announced that he is a candidate for re-election. And this a few days after threatening to sink American aircraft carriers in the Mediterranean in the event of interference in the Israeli-Palestinian conflict…
And as a reminder, five very influential countries will join the BRICS club at the start of next year. Egypt, Iran, Saudi Arabia, Ethiopia and the United Arab Emirates. So many Muslim countries could become furious at the massacres of Palestinians carried out with the blessing of Washington.
The international situation is explosive. In the event of a clear worsening of relations between the West and the BRICS, what remains of trade will end up being made of gold. Knowing that the Red Sea, through which 12% of world trade passes, is bordered by Egypt, Saudi Arabia and Ethiopia…
And less trade means inflation. This is the main reason why everyone should imitate central banks by taking refuge in safe havens.
Bitcoin rather than gold. For what ? Because the amount of gold coming out of the ground this year will once again break a record. Conversely, in May 2024, the creation of bitcoins will decrease by half. It will officially become rarer than gold.
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