Big Fluctuations In International Gold, China Should Take Advantage Of Sharp Decline In Market Holdings

Nowadays, the central banks of all countries in the world, especially developed countries, have large scale holdings of physical gold. According to relevant information, the Federal Reserve holds 8133.5 tons of gold reserves, accounting for 75.1% of the reserves, ranking first in the world, the German central bank holding 3391.3 tons, ranking second, the rest being IMF holding 2966.8 tons, Italy holding 2451.8 tons, France holding 2435.4 tons, India official yellow gold holdings accounted for 9.6% of the total foreign exchange reserves, while India folk gold reserve (including gold jewelry) is as high as 15000 tons, accounting for 10% of the world's total gold. In contrast, China's central bank's physical gold reserve is only more than 1000 tons, and foreign exchange reserves account for less than 2% of gold, which is quite different from that of the 75% of the Federal Reserve.

Since the world financial crisis in 2008, in order to avoid plunge into the great depression, the western developed economies have tried their best to "rescue the market", competing for printing money printing machines, and injecting too much liquidity into the market. From the perspective of future trends, the global commodity market, including the precious metal market, will also face more severe inflation shocks with "far more money than goods".

According to the market price, the same amount of foreign exchange reserves of the same amount of 1 trillion, the amount of bulk commodities such as gold, oil, ore, rubber (20485, -45.00, -0.22%) and grain can be purchased at present, far less than ten years ago. Excessive issuance of money will sooner or later stir up trouble in the commodity market, and it is impossible to evaporate quietly. After 10 years, the amount of gold and commodities that China can buy more than 3 billion US dollars of foreign exchange reserves may not be half as much as it is now, or even less, even if interest is added.

In the past, the main reason for the central bank's reluctance to increase its holdings was fear. Gold price So skyrocketing. But now there is an excellent opportunity for China's central bank to use large quantities of physical gold. Some well-known Wall Street investment banks believe that the global gold bull market has ended and began to enter a long bear market, which has thrown a lot of money in the market. There is a view that the next stage of the golden trend will take at least 10 years. The price of gold will fall to 1200 yuan / ounce, or even less than 1000 U.S. dollars / ounce. All these provide time and space for the Central Bank of China to take large quantities of physical gold in a leisurely way, without worrying about the sharp rise in gold prices and raising the cost of holdings.

The author believes that the central bank can make use of international investment banks to make short use of energy, take advantage of every golden drop, especially the sharp fall, and increase substantial gold holdings, and insist on the two aspects of spot market and futures market. In the process, don't be afraid of the super empty list of international investment banks. The lower the price of gold, the more buying it will be. No matter how much gold they sell, we can accept them on a single basis and offer them all in full.

Global accumulation today Physical gold The volume is 170 thousand tons, and the market price is about 8 trillion dollars, even if 1/4 of them come to China, it only consumes about 50% of the existing foreign exchange reserves. As the Central Bank of China gradually purchases and delivers physical gold in the process of falling gold prices, the purchase cost of physical gold will continue to decrease. We can increase the proportion of physical gold in China's foreign exchange reserves to 3 or more through 5 years, 10 years and 20 years, at least to the global average level.

While improving the central bank's gold reserves, we should continue to expand the number of private gold deposits. At present, the number of physical gold reserves of the Central Bank of China is too small. The "2012 China gold industry social responsibility report" released by the China Gold Association shows that China's private gold reserves are only 4.6 grams per capita, which is quite different from the global average of 20 grams per capita, and has great room for growth. In the future, China's holdings of gold will increase China's gold purchase and imports in the international market and digest excessive cash and foreign exchange; on the other hand, it will sell a considerable portion of the gold purchased to urban and rural residents, while reclaiming Renminbi for foreign exchange and reducing domestic inflation pressure.

With the short strength of international investment banks and hedge funds, the bulk of global physical gold is gradually transferred to China, and it is a low-cost transfer. RMB internationalization The economic base and the promotion of the formation of the new world reserve currency are of long-term strategic significance, which is much safer than buying cash devalued foreign currencies and bonds that are continuously devalued.