Daily Market Update

China Gold Reserves Rise To 60.26 Million Ounces Worth Just $79.5 Billion

China increased its gold reserves for a third straight month in February, data from the People’s Bank of China (PBOC) showed this morning.

The value of China’s gold reserves rose slightly to $79.498 billion in February from $79.319 billion at the end of January, as the central bank increased the total amount of gold reserves to 60.260 million fine troy ounces from 59.940 million troy ounces.

The People’s Bank of China (PBOC) did not explain why it bought more gold. It is almost ertaintly in large part due to concerns about the Chinese, U.S. and global economic outlook and the outlook for the dollar in the coming months and years.

China’s foreign exchange (fx) reserves rose to their highest in six months in February. There are growing concerns over U.S.-China trade talks and the potential for trade wars and the impact of this on their respective economies.

Chinese foreign exchange (fx) reserves, the world’s largest, rose by $2.26 billion in February to $3.090 trillion, central bank data showed on Thursday, marking the highest level since August 2018. The U.S. trade deficit hit its highest in a decade in 2018, in a resounding failure for President Donald Trump’s global trade offensive, U.S. government data showed yesterday.

It is important to realise that the PBoC still have a very meager 2.4% of its foreign exchange reserves in gold, so their gold diversification is likely in it’s infancy. John Reade of the World Gold Council notes on Twitter that the last time the PBoC reported regular monthly increases in gold holdings, it continued for 24 months.

We have long pointed out two other entities, besides the PBOC, have also been buying gold – the State Administration of Foreign Exchange (SAFE) and the China Investment Corporation (CIC).

These potentially sizeable sources of demand are not included in the PBOC figures.

It is important to note this lack of transparency regarding total aggregate Chinese central bank and sovereign fund demand. Therefore, it is likely that we are underestimating Chinese and thus global gold demand.

China may be adopting the Russian strategy of being very public in announcing their increasing gold reserves as they attempt to position the yuan as an alternative reserve currency to the world’s current reserve currency the dollar.

 

 

News and Commentary

Gold steady on firmer dollar ahead of ECB policy meeting (Reuters.com)

ECB Readies Response Amid Euro-Area Slowdown (Bloomberg.com)

Asia shares sluggish as global growth concerns return; ECB meeting eyed (Reuters.com)

U.S. senators say Saudi crown prince has gone ‘full gangster’ (Reuters.com)

Sweden’s central bank trims forex reserve after Nordea moves to Finland (Reuters.com)

U.S. Trade Gap Surged to $621 Billion in 2018, 10-Year High (Bloomberg.com)

Trump’s Big Tax Cuts Did Little to Boost Economic Growth (Bloomberg.com)

Global Economy Is Sinking Fast, And It Will Take The US With It (ZeroHedge.com)

Chinese Hackers Stole Maritime Military Secrets From Group Of Universities (ZeroHedge.com)

Gold advocates support free and fair trade with stable, international gold-backed money (Gata.org)

U.S. Trade Gap Surged to $621 Billion in 2018, 10-Year High (Bloomberg.com)

Gold Prices (LBMA PM)

06 Mar: USD 1,285.55, GBP 978.82 & EUR 1,136.82 per ounce
05 Mar: USD 1,285.00, GBP 975.19 & EUR 1,134.78 per ounce
04 Mar: USD 1,287.45, GBP 972.93 & EUR 1,135.14 per ounce
01 Mar: USD 1,309.95, GBP 989.27 & EUR 1,152.23 per ounce
28 Feb: USD 1,325.45, GBP 996.21 & EUR 1,162.82 per ounce
27 Feb: USD 1,326.45, GBP 998.02 & EUR 1,164.09 per ounce

Silver Prices (LBMA)

06 Mar: USD 15.09, GBP 11.49 & EUR 13.36 per ounce
05 Mar: USD 15.11, GBP 11.47 & EUR 13.33 per ounce
04 Mar: USD 15.16, GBP 11.50 & EUR 13.38 per ounce
01 Mar: USD 15.56, GBP 11.75 & EUR 13.67 per ounce
28 Feb: USD 15.81, GBP 11.89 & EUR 13.85 per ounce
27 Feb: USD 15.86, GBP 11.91 & EUR 13.92 per ounce

Recent Market Updates

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Mark O'Byrne
Executive Director

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