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Posted on 12/13/2025 3:33:19 PM PST by delta7
Without a doubt, the Chinese central bank (PBoC) is still the leading single entity that is driving up the gold price to record highs, year-to-date by more than 55 percent.
In the third quarter of 2025, the PBoC’s gold purchases (reported and unreported) accounted for 118 tonnes, up 39% MoM and 55% YoY, according to my long-time methodology1 (now copied by Goldman Sachs, Bloomberg, MarketWatch, The Washington Post, TIME magazine, Financial Times, Financiele Dagblad, and El País, to name a few).
Chart 1. Reported central bank gold buying versus estimates by the World Gold Council on central bank gold buying based on field research (reported and unreported buying). The majority of unreported buying must be ascribed to China.
My estimated total for Chinese monetary gold reserves stands at 5,411 tonnes in Q3, versus 2,304 tonnes reported by the central bank of China to the IMF.
Why is China buying so much gold?
It’s because China is the second-largest economy globally, and due to the weaponization of the dollar since the Ukraine war in 2022, the vast, covert buying spree by China and countries like Saudi Arabia should not be viewed as a hedge against the dollar but as a replacement for the dollar.
The mBridge Gold Standard
For the better part of the past 80 years, the U.S. dollar has functioned as the world’s trade and reserve currency. This setup gave the United States the exorbitant privilege of being able to print money to pay for imports, even though America’s manufacturing base has been eroded as a consequence.
China aims to establish an alternative to the U.S. dollar while seeking to avoid the risks associated with issuing its own reserve currency.
On November 19, 2025, the chairman of the Central Bank of the United Arab Emirates completed a landmark digital currency transaction during a meeting with the governor of the People’s Bank of China, formally inaugurating project mBridge.
The platform allows participating countries with established digital currencies to conduct bilateral trade in their own currencies, bypassing the U.S. dollar.
For the “mBridge gold standard” to be fulfilled, any surplus of local currency accumulated through trade must be directly exchangeable in a liquid gold market. Furthermore, it requires a new international gold vaulting and clearinghouse network.
Chart 2. In a historical shift, Eastern countries that before 2022 were price sensitive are now driving gold higher.
China will be the largest, or one of the largest, trading partners of countries participating in mBridge, and so the renminbi will be a dominant trade currency in the arrangement. This is why the Chinese are developing the Shanghai International Gold Exchange (SGEI).
The SGEI was launched in the Shanghai Free Trade Zone (FTZ) in 2014 and recently opened its first offshore vault in Hong Kong. The idea is to open additional vaults abroad.
The international vaulting system will likely be developed in accordance with the extensive network of repositories that constitute the SGE system within the Chinese domestic market.
In the last SGE Annual Report, it states that the SGE adopts a “centralization, netting, and multi-tiered” clearing model with 18 certified margin custodian banks offering 70 certified vaults in 36 cities throughout the mainland.
Gold Is Shifting the Distribution of Global Reserves
As central banks aggressively load up on gold and move the price to new all-time highs, global gold reserves are rising to the detriment of the dollar. By Q3, my estimated total of central banks’ monetary gold reserves accounted for 40,225 tonnes, 49 percent of which is owned by countries outside the West. In the 1990s, this percentage was 25 percent.
Due to the actions of the PBoC in increasing prices, monetary gold now accounts for almost 28 percent of global international reserves. This is a truly monumental increase from 21 percent in 2024.
Chart 4. Because gold has appreciated against all reserve currencies since Q3, gold’s “live” share of reserves is actually closer to 30 percent.
In my next article, we will zoom in on gold versus the dollar’s share in international reserves.
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Notice he doesn’t talk about an audit anymore. That should tell you all you need to know.
It is dawning on China that any reserves held abroad will be frozen once it tries to replicate Japan’s actions in WW2, but successfully. So it has decided to store, in a big way, physical reserves that are compact and light relative to value, and untraceable for payments to smugglers and other middlemen needed to acquire foreign items unavailable from its own holdings while in the midst of a blockade and an unlimited war on merchant shipping.
He who makes the most products rules the world. Gold is not a necessity. Food, shelter, transportation, medicines, clothing etc are required by all humans.
He who makes the most products rules the world.
AI:
China is the largest manufacturer in the world, accounting for approximately 27.7% of global manufacturing output. The United States follows as the second-largest manufacturer, contributing about 17.3% of the global share.
China remains the largest manufacturer globally, contributing over a quarter of the world’s manufacturing output.
Gold mining in the People’s Republic of China has propelled the country to become the world’s largest gold producer since 2007.
I bet a lot of people will disagree with you on that. Early 20th century in Germany is another example as is Russia after the soviet collapse and even Venezuela more recently. In every case gold held it's value during any turmoil. Be without it at your peril.
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Are you still shilling for investments in Chinese gold plated tungsten bars?
Question: Where does China get all those dollars to buy the gold? Answer: From their trillion-dollar trade surplus with the West, and especially the US.
But, shouldn’t those dollars go to the companies and workers that produce the products that are sold for dollars? Not in China.
You see, the CCP exploits cheap Chinese slave labor to make all the products the West buys, and then converts the excess dollars, not into US Treasurys, but into gold.
Once they have sufficient gold reserves, they can offer renminbi backed by gold as a reserve currency for world trade, replacing the dollar, which is only backed by the full faith and credit of the US.
All those people on CNBC and cable channels selling you gold as a secure retirement investment are actually selling you stock in Chinese slave labor.
If Chinese workers were paid wages comparable to Western workers, and if Chinese were not banned from exchanging yuan for dollars in a legitimate foreign exchange market, Chinese exports would increase in cost, and the CCP would no longer be able to steal market share and destroy manufacturing jobs in the US and Europe.
Unfortunately, the West still thinks the CCP wants fair trade deal and low tariffs. The CCP bypasses the nominal tariffs by transshipping goods to other low-tariff countries for shipment to the US and Europe. Their trade surplus is with these countries, part of an illegal scheme to fool Trump’s trade negotiators.
The CCP is a criminal organization that has enslaved its people to suck wealth from the West and build a global empire that will rule the economic world from the shadows.
And nobody here gets it yet.
You, me, a good %age of FR, the author of this article, but the people making decisions are of two types:
- Some, IMO including Trump, working on the problem through returning domestic energy and goods manufacturing and tariff power, which is effective because as you noted the people *in* China are being enslaved and so don’t constitute much of a market per se; and
- Others know full well and keep pretending otherwise, and really provoking the question of why and to what end. Are they just short-term self-serving, beholden to the PRC, or have some other idea or ideology they pursue?
Correct. China recorded $1 TRILLION TRADE SURPLUS.
I am living the American dream life and don’t have any gold. I made most of my money in stocks.
China went out - got gold, rare earth elements, and made loans to greedy stupid counties who thought the Chinese were as gullible and stupid as democrat Americans. They weren’t. Amd stupid countries are waking up to that reality - they havce to pay the money back - or deal.
China’s not ‘forgiving loans’ they using them as leverage. We were outsmarted because too many democrats were corrupt... looking the other way for cash and benefits.
Most industries in China are government owned. Which makes trade with them a different situation than with other countries like Japan.
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