The dollar is rocking! China buys tons of gold as last

China's central bank secretly buys gold, despite assurances to the contrary. This is caused by fears of a depreciation of the dollar.

According to Gainesville Coins analyst Jan Nieuwenhuis, the gold is bought in London by Western banks, which themselves deliver it to China. Nieuwenhuis found that the supply of gold in the Chinese gold market exceeded demand and "circumstantial evidence” led him to conclude that "the surplus was at least 400 tons”. This surplus in the Chinese gold market was not purchased by the PBOC through the Shanghai Stock Exchange, but "was imported in 400oz bullion from the UK and secretly purchased by the People's Bank of China”.

The expert drew his conclusions based on an analysis of data from UK customs. They show that in May the NBK "continued to buy gold in the amount of 53 tons”.

This is because in the customs data that goes through the International Merchandise Trade Statistics (IMTS), all gold reported is "non-monetary", meaning it is not owned by monetary authorities such as central banks. The UN IMTS Regulations state that monetary gold is treated as a financial asset and not a commodity by customs authorities, so transactions involving it should be excluded from IMTS.

The moment the banks send the gold out of the UK it becomes "non-monetary bullion", but when it arrives in China it is monetized (changes ownership) and placed in the NBC vaults, probably in Beijing. This strategy allows the NBK to understate its gold purchases to cool the markets and continue to add gold to its reserves at lower prices, the author writes.

Nieuwenhuis believes that since the beginning of the war in Ukraine, when the West froze the foreign reserves of the Central Bank of the Russian Federation in the amount of 300 billion in early 2022, the United Kingdom began to export 400 ounce bars to China in huge volumes and this it's no accident.

"Since then, China has taken control of gold prices from the West and broken the correlation of gold prices with "real interest rates“ (the ten-year bond yield)“, the author writes.

According to the analyst, there is no reason why China should stop buying gold due to the need to diversify its foreign exchange reserves.

The People's Bank of China also buys gold from Switzerland and other countries, flows that can be included or excluded from customs reports, but Nieuwenhuis does not have access to that data.

In March, he revealed a secret stockpile of gold that the NBK would hold, saying it could stockpile more than 5,300 tonnes to prepare for the coming devaluation of the US dollar.