China stockpiling gold: Is it trouble for the U.S. dollar?

China’s central bank has been actively acquiring physical gold to bolster its reserves for the past three years.

Speculation is growing that the country may be secretly buying more gold to reduce its reliance on the U.S. dollar. The People’s Bank of China (PBoC) has increased gold purchases since Russia invaded Ukraine in 2022, according to a gold analyst at Money Metals.

The West froze Russia’s foreign exchange reserves, including those denominated in the U.S. dollar and the euro. This unprecedented use of the dollar as a weapon alarmed foreign central banks, prompting them to buy record amounts of gold, according to MarketWatch.

In 2022, the People’s Bank of China (PBoC) reported its first gold reserve increase since September 2019, according to the World Gold Council. However, this doesn’t mean the central bank didn’t buy gold during that time, as obtaining accurate data from China can be challenging due to government secrecy.

The U.S. dollar is declining, raising concerns about its status as the top safe-haven currency. Aggressive tariffs and political pressure on the Federal Reserve are contributing to this slide. Other assets in your portfolio may benefit from this shift. “Given China’s significant gold purchases, it’s wise for them to limit public disclosures,” said the president and CEO of Money Metals.

“It is not in the best interest of any genuine buyer to increase purchase costs unnecessarily. Data from China’s central bank shows a rise in gold reserves, with the People’s Bank of China (PBoC) reporting purchases of 62 metric tons in November and December 2022, bringing total reserves to over 2,000 metric tons for the first time, according to the World Gold Council (WGC).”

In the following year, the People’s Bank of China (PBoC) became the largest gold buyer among central banks, acquiring 225 metric tons to bring its total holdings to 2,235 metric tons, according to the World Gold Council (WGC).

In 2024, the PBoC purchased an additional 44 metric tons, with 29 metric tons bought from January to April. There were no updates on gold reserves until buying resumed in November. By the end of 2024, the PBoC held 2,280 metric tons of gold, which constituted 5% of its total international reserves.

China and other countries, especially those not closely allied with the U.S., aim to reduce their dependence on the U.S. dollar due to its use as a weapon against Iran and Russia. China’s interest in gold to build its central bank reserves is undeniable.

China, as the world’s largest gold producer and one of its biggest consumers, can influence gold markets. The head of commodity strategy at TD Securities noted that China aims to boost its gold reserves to diversify its $3.3 trillion in foreign exchange reserves, of which only 6.7% is currently held in gold.

This move is intended to protect against the potential erosion of the U.S. dollar’s purchasing power amid concerns over the U.S. $37 trillion debt. “China aims to reduce its reliance on the U.S. dollar to preserve purchasing power, mitigate sanctions risk, and adapt to decreased trade with the U.S. U.S. tariffs have lowered the need for dollar holdings.

Gold offers no counterparty risk, intrinsic value, and protection against inflation. Currently, global central banks hold 20% of their foreign exchange reserves in gold, the highest since the Bretton Woods system.”

The 1944 pact established a new exchange-rate system that pegged foreign currencies to the U.S. dollar, which was in turn pegged to gold. Gold is viewed as the “only asset” that could replace the dollar as the prime world reserve asset due to its liquidity and long history of use.

Despite this, gold has struggled to reach record highs, hitting an intraday record high of $3,509.90 on April 22 on the Comex. The Federal Reserve’s delay in cutting interest rates allowed gold to pause and consolidate its recent gains.

However, gold is likely to increase again, especially if the stock and bond markets weaken or if the Fed adopts a more dovish stance. Major unforeseen events, like a war escalation, could also drive prices higher.

The country known as the “Red Dragon” is China.

Revelation 12:3 And there appeared another wonder in heaven; and behold a great red dragon, having seven heads and ten horns, and seven crowns upon his heads.

Revelation 12:4 And his tail drew the third part of the stars of heaven, and did cast them to the earth: and the dragon stood before the woman which was ready to be delivered, for to devour her child as soon as it was born.

Revelation 12:5 And she brought forth a man child, who was to rule all nations with a rod of iron: and her child was caught up unto God, and to his throne.

Revelation 12:6 And the woman fled into the wilderness, where she hath a place prepared of God, that they should feed her there a thousand two hundred and threescore days.

Revelation 12:7And there was war in heaven: Michael and his angels fought against the dragon; and the dragon fought and his angels,

Revelation 12:8 And prevailed not; neither was their place found any more in heaven.

Revelation 12:9 And the great dragon was cast out, that old serpent, called the Devil, and Satan, which deceiveth the whole world: he was cast out into the earth, and his angels were cast out with him.

Revelation 13:1 And I stood upon the sand of the sea, and saw a beast rise up out of the sea, having seven heads and ten horns, and upon his horns ten crowns, and upon his heads the name of blasphemy.

1 John 2:22 Who is a liar but he that denieth that Jesus is the Christ? He is an antichrist, that denieth the Father and the Son.

John 8:44 Ye are of your father the devil, and the lusts of your father ye will do. He was a murderer from the beginning, and abode not in the truth, because there is no truth in him. When he speaketh a lie, he speaketh of his own: for he is a liar, and the father of it.

2 Corinthians 4:4 In whom the god of this world hath blinded the minds of them which believe not, lest the light of the glorious gospel of Christ, who is the image of God, should shine unto them.

John 3:19 And this is the condemnation, that light is come into the world, and men loved darkness rather than light, because their deeds were evil.

John 3:20 For every one that doeth evil hateth the light, neither cometh to the light, lest his deeds should be reproved.

1 Timothy 6:5 Perverse disputings of men of corrupt minds, and destitute of the truth, supposing that gain is godliness: from such withdraw thyself.

1 Timothy 6:6 But godliness with contentment is great gain.

1 Timothy 6:7 For we brought nothing into this world, and it is certain we can carry nothing out.

1 Timothy 6:8 And having food and raiment let us be therewith content.

1 Timothy 6:9 But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition.

1 Timothy 6:10 For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

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