China Intensifies Covert Gold Accumulation Through London Imports

China Intensifies Covert Gold Accumulation Through London Imports

A Stealthy Strategy by the People’s Bank of China

Renowned gold market analyst Jan Nieuwenhuijs has highlighted a sharp uptick in China's secretive gold-buying activities during Q4 2024. He estimates that the People’s Bank of China (PBOC) has acquired over 100 tonnes of gold through unreported imports from London.

Evidence of Covert Purchases

Nieuwenhuijs bases his findings on significant discrepancies between reported private sector gold purchases and the total imports from London:

• September 2024:
  • Price premiums on the Shanghai Gold Exchange turned negative.
  • Total imports hit 95 tonnes, with 60 tonnes likely heading to PBOC vaults.
• October 2024:
  • Imports totaled 95 tonnes, including 55 tonnes directly from London.
• November 2024:
  • PBOC officially reported acquiring just 5 tonnes, while total imports soared to 122 tonnes, indicating a larger unreported acquisition.

These trends suggest the PBOC is quietly accumulating gold, leveraging London’s bullion market for significant transactions.

Strategic Implications

Nieuwenhuijs ties this covert accumulation to a broader geopolitical and financial strategy:

1. Shift from Dollar to Gold Recycling:
   • Countries, including China, are reducing reliance on U.S. dollars amid fears of inflation-driven debt restructuring in the U.S., where global debt recently surpassed $36 trillion.
2. Positioning Gold in the Financial System:
   • Chinese policymakers foresee gold playing an increasingly pivotal role in the international financial system, with rising demand as a hedge against fiat currency volatility.

China's Influence on Gold Markets

Nieuwenhuijs’ observations point to a deliberate market strategy:

• By keeping gold purchases covert, China avoids driving up prices, misleading global markets to stabilize or even cool off prices temporarily.
• These moves allow the PBOC to bolster reserves at favorable rates, strengthening its financial position without triggering immediate market reactions.

Conclusion

China’s covert gold accumulation reflects its growing intent to diversify away from dollar dependence and hedge against future global financial uncertainties. As geopolitical and economic tensions mount, this strategy could reshape the global financial landscape, highlighting the central role of gold in the evolving monetary system.