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China Increasing Its Gold Reserves

Gold usually starts to do better at the end of the market cycle when the Federal Reserve starts lowering rates.

The main reason that markets are at all-time highs is the hope that the Federal Reserve will cut rates at the end of July when they meet.

I’m not sure I’m entirely comfortable with that fact.

A Federal Reserve interest rate cut is the only thing sustaining the 9 year stock market rally. Earnings forecasts are coming down and capex spending has come to a halt but the market keeps hitting all-time highs on hopes of a rate cut. What could go wrong?

China has stepped up its purchases of gold.

The People’s Bank of China increased its bullion reserves to 61.61 million ounces in May from 61.10 million a month earlier. That’s an increase of 15.86 tons, after almost 58 tons of gold were added to the nation’s stockpile in the five months to April. At this rate of accumulation, China could buy 150 tons in 2019, according to Lau.

As trade wars rage and the Trump Administration uses the U.S. dollar to invoke regime change in countries around the world, gold purchases by central banks are on the rise.

China is not the only country buying gold. Russia picked up its gold buying years ago and is now one of the top gold buyers on the planet.

The use of the U.S. dollar as a weapon to control the world has increased the call of leaders to get off the U.S. dollar standard and return to the gold standard.

Recently, the Malaysian Prime Minister Mahathir Bin Mohamad proposed moving toward a gold-backed common Asian currency.

Positive divergence between large players volume and the price of gold. The positive Twiggs Money Flow suggests gold is being accumulated at current price levels.
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