China Likely Bought 10,000 TONS of Gold… And If They Did, Here’s Why

sentinelblog

Source: SRS Rocco, by Chris Hamilton

My article “10,000 tons of gold…The math says China could have easily done it!”explains how it’s possible or even likely China has amassed 10,000+ tons of gold. What it doesn’t explain is the context as to why this is so important. I know some now this story well, but for most, this needs repeating.

A little History: Gold has long represented the primary means of rebalancing trade surplus / deficits between nations. As a nation ran a trade surplus with another, the exporter ended up with an excess of the importer nations currency. The primary means to rebalance was for the exporter to transfer back to the importer nation it’s currency in exchange for gold. If this continued, the importing nations falling gold holdings would represent a weakening currency…which would mean higher prices to the importing nation and less purchasing of the…

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