China is secretly buying gold - for a war?
The price of gold climbs to historic highs. The financial markets are initially taken aback. Now it becomes clear that China is buying up gold on a massive scale. Military analysts warn that Beijing is preparing an attack on Taiwan.
The price of gold rose to a record high of 2135 US dollars per ounce on Monday night. Never before has the precious metal been so expensive. To the astonishment of many stock market participants, gold has thus become one of the best investments in 2023 - despite the fact that there is no interest on gold, but there are certainly profitable returns on many investments. Some analysts initially speculated that the flight to gold had something to do with the wars in Ukraine or the Gaza Strip. Others pointed to inflation or the interest rate peak that may have been reached.
However, it now appears that something else is behind the price increase: massive gold purchases by China. According to the World Gold Council, China's central bank has bought up gold for twelve months in a row. The People's Bank of China's holdings were officially increased by around 200 tons of gold. The Bloomberg news agency reports that China bought 23 tons of gold in October alone, bringing its total holdings to 2215 tons. This means that China now has more reserve gold than all of Latin America, Africa and India combined. "The Chinese government is currently investing at least one billion dollars in gold purchases every month," report gold contract traders from Singapore. There are repeated reports in the Asian media that China's true gold reserves and gold purchases are actually much larger than the official data suggests. China has a "secret gold reserve", which is fed by the country's own considerable mining activities. The country itself is the largest gold producer in the world.
Fear of Western sanctions
The Chinese central bank makes no secret of the motive for its current gold purchases. Beijing says it needs to prepare for a war on Taiwan and a conflict with the USA. In the event of a conflict, China must not become a victim of Western sanctions like Russia in the Ukraine war. The Reuters news agency quotes Chen Hongxiang from the central bank as saying: "Against the backdrop of intensified strategic competition between China and the US and the conflict over the Taiwan Strait, we should be wary of the US repeating this model of financial sanctions against China." China should "prepare for a rainy day" to ensure its financial and economic stability.
The Financial Times reports that actual Chinese gold purchases are significantly higher than the 200 official tons because private and semi-public addresses in China are currently also systematically buying gold. This has to do with the real estate crisis, and Chinese private individuals and companies are also being encouraged to make speculative purchases by the central bank's gold purchases.
A familiar pattern
This appears to be a repeat of a pattern of war preparations. Russia also massively expanded its gold holdings before the war in Ukraine in order to have sufficient reserves in the event of a conflict. Military experts are therefore now observing with concern that China is consistently and openly arming itself for a possible Taiwan war.
China is also using other means to emancipate itself from the USA and the West in terms of financial policy. For example, it is reducing its reserve holdings of dollar bonds and concluding more and more trade agreements that settle international goods transactions in yuan. Beijing is closely monitoring how the West has frozen Russia's foreign exchange reserves of 300 billion dollars and excluded Russian banks from the SWIFT system as part of the sanctions against Russia. Beijing's leadership knows that a sanctions dispute with the West would be far more destructive for China than for Russia.
Meanwhile, the new Chief of Staff of the US Armed Forces, General Charles Q. Brown is calling on Americans to be more vigilant towards China. Everyone should be "concerned" about a war with China, Brown said in an interview with the US news magazine "Newsweek". Regarding a possible attack by the People's Republic on Taiwan, he warned: "We want to be and should be concerned about it, whether it happens or not." The Chief of Staff thus joins a group of high-ranking US military officers and politicians who have been warning for months of an imminent attack by China on Taiwan. In March, Secretary of State Antony Blinken emphasized that China would be in a position to conquer Taiwan by 2027 at the latest - when China's People's Liberation Army celebrates the 100th anniversary of its founding.
Unchecked aggression
Meanwhile, tensions between the USA and its allies Taiwan, Japan and the Philippines on the one hand and China on the other are increasing on a weekly basis. At the beginning of the week, the American warship USS Gabrielle Giffords deliberately patrolled the waters in the South China Sea illegally claimed by China. China condemned this with martial words: "The US has seriously undermined peace and stability in the region." But the opposite is true. China is pursuing an aggressive annexation policy in the South China Sea, provoking resistance from all the neighboring states - Vietnam, Taiwan, Malaysia, Brunei, Indonesia and the Philippines.
China has been stepping up its direct military provocations against Taiwan in recent days. Taipei regularly reports Chinese fighter planes and warships in the vicinity of the island, including planes provocatively flying over the sensitive center line of the Taiwan Strait. Beijing is thus demonstrating its new military strength in the run-up to the elections in Taiwan. Presidential and parliamentary elections will be held in Taiwan on January 13.
In November alone, the Chinese air force carried out four large-scale missions in the sea area. China officially declares that its activities in the vicinity of Taiwan are aimed at preventing "secret agreements" between Taiwanese separatists and the United States and protecting China's territorial integrity. The People's Republic regards the democratically governed island as a renegade province and makes no secret of its intention to enforce reunification with the mainland by force. Xi Jinping recently said in a phone call with US President Joe Biden that China would implement reunification, which was "unstoppable". A large treasure trove of gold could be helpful in the conquest.
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The USA has expressed concerns about China's massive gold purchases, citing potential military preparations for a conflict over Taiwan. Dean Cheng, a senior research fellow at the Center for Strategic and International Studies, stated, "Many of us are wondering if China is preparing for something more than just a strategic economic move."
The US Congress has also weighed in, considering imposing sanctions on Chinese entities involved in the acquisition of gold. Senator Bob Menendez, a prominent critic of China, explained, "We cannot sit idly by while China amasses vast amounts of gold and uses it as a weapon to undermine the international financial system."
Amidst these tensions, Taiwan's gold reserves have also seen a significant increase. Despite its smaller size, Taiwan has been purchasing gold to bolster its defenses as well, investing in gold-related businesses and encouraging its citizens to buy gold as a way to hedge against potential economic sanctions.
This gold rush could have major implications for the global economy if a conflict between the USA and China over Taiwan were to escalate, potentially leading to a bull market for gold and a destabilization of international finance.
Source: www.ntv.de
