• Article
• 2024-07-03

China Imports 1,168T Gold, Cuts $97.5B US Debt

According to the latest data, by the end of September this year, China had imported a total of 1,145 tons of gold, and with an additional 23 tons imported in October, the total gold imported in the first ten months reached 1,168 tons.

By the end of November 2023, China's total gold reserves had reached 2,226 tons, ranking sixth in the world.

It can be seen that in just the first ten months, China's gold imports have already reached more than half of the total reserves, and this pace is accelerating.

At the same time, in October, China continued to reduce its holdings of U.S. Treasury bonds by $8.5 billion, marking the seventh consecutive month of reduction.

The total holdings of U.S. Treasury bonds have now decreased to $769.6 billion, compared to $867.1 billion at the end of last year, which means that in the first ten months of this year, China has reduced its U.S. Treasury bonds by $97.5 billion, and the pace of reduction is also accelerating.

As the saying goes, when U.S. Treasury bonds are strong, gold is weak; when U.S. Treasury bonds are weak, gold is strong.

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What does this inflow and outflow mean for our country?

It means that our country is bearish on the U.S. economy while also hedging its own risks.

There are three reasons for this.

1.

In the short term, first of all, the decline in inflation in the United States this year does not mean that inflation will continue to decline next year.

With OPEC's oil production cuts, prices may rise again.

Moreover, the strong employment rate in the United States will also provide a strong backing for the dollar not to cut interest rates next year.

To put it bluntly, if the United States' harvest does not meet expectations, will the dollar easily cut interest rates?

The reason the Federal Reserve is signaling that it will cut interest rates is to let everyone clear out their remaining grain, so that when the dollar raises interest rates again, other countries will be hit faster, which will help the United States to recover.

Conversely, if it comes to the worst, and the dollar cuts interest rates next year, it also represents that the U.S. economy has officially entered a recession.

So, with the U.S. harvest not meeting expectations, will the U.S. play dirty?

For example, will it kick our country out of the SWIFT settlement system, or freeze our country's dollar foreign exchange reserves?

Therefore, in the short term, our country's sale of U.S. Treasury bonds has little to do with dollar interest rate hikes or cuts, and risk aversion is the primary element.

2.

In the long term, the decline of the dollar's economic hegemony is inevitable, and the global currency will definitely return to the gold standard.

As of December 20, the scale of U.S. Treasury bonds has reached $33.93 trillion, which is 122% of the U.S. GDP.

By the end of September 2023 fiscal year, the interest on U.S. Treasury bonds alone reached $659 billion, doubling in three years.

Some institutions predict that by the end of 2031, the scale of U.S. Treasury bonds may reach $68 trillion, which is 260% of the U.S. GDP.

From this, we can see that the snowball of the scale of U.S. Treasury bonds is getting bigger and bigger now, which is completely a Ponzi scheme!

Because the United States simply cannot repay this huge debt.

Such a credit-based monetary system will definitely collapse in the future, and the world will definitely return to the gold standard monetary system, which is a historical inevitability.

This is also the true purpose of our country's early sale of U.S. Treasury bonds, hoarding gold, and launching the international digital yuan.

3.

Looking at the game between the two countries, the United States has now explicitly stated that it will restrict the development of our country's high-end manufacturing industry, and even go to great lengths to create a global industrial chain that excludes China.

Speaking of which, if you want our help, that's fine, but the words are so harsh, and the deeds are so ruthless, what obligation do we have to help you?

We are not the kind-hearted Mr. Dongguo anymore.

Now, the United States seems to be thriving on the surface, but in reality, it is at a record high in debt, and the Federal Reserve is also suffering huge losses, while China is undermining the foundation.

As for whether the United States is panicked, I'm afraid only they know, but at least we will not be the scapegoat anymore, and we may continue to sell U.S. Treasury bonds in the future.