Chinese central bank actions differ from those of Western central banks
A few months ago, the market heard rumours that the Chinese central bank had stopped buying gold. Then this information was officially confirmed.
However, this situation did not last long. Several Chinese banks have received new quotas for gold imports from the country's Central Bank as they expect demand to recover despite record prices, four sources familiar with the situation told Reuters.
The new quotas for gold imports should help the People's Bank of China control the amount of gold bullion coming into the country. It is worth recalling that China is not only the world's largest consumer of the yellow precious metal, but also its producer.
New quotas on gold imports should help the People's Bank of China control the volume of bullion entering the country. It is worth remembering that China is not only the world's largest consumer of the yellow precious metal, but also its largest producer.
Over the past 2 months, gold prices have reached new historic highs. And it seems illogical that the Chinese central bank is ready to enter the market and buy gold at these levels. What's more, it would drive prices even higher.
But this logic is good for people and bankers living in Western countries. The heads of central banks are elected for a fixed term. They also have to report on their actions. This leads to a planning horizon that in most cases is limited to a few years.
In China, the opposite is true. The leadership and the Communist Party have little interest in what will happen in the next 1-5 years. They think in terms of cycles. These are tens and even hundreds of years.
From this point of view, it doesn't matter at what price you buy gold. Fiat money is ashes. And gold is forever in the vaults. Chinese vaults. So as the risks of foreign asset freezes increase (our previous blog post), this process will go on forever.
The only reason gold is not yet worth $5,000 is that more tonnes of metal are being mined from the earth every year. But even this process is not endless.
Website : https://gold.storage/
Whitepaper: https://gold.storage/wp.pdf
Follow us on social media:
Telegram: https://t.me/digitalgoldcoin
Steemit: https://steemit.com/@digitalgoldcoin