Why is China Acquiring Gold so Discretely?-ZH version
The West's Leadership is Likely Complicit
One thing is for sure, The East and West violently disagree on the value and role of Gold in the Cold War 2.0 era
Why is China Acquiring Gold so Discretely?
The Answer May Be Simple. Implications Are Not.
The answer to the title of this piece and the question raised implicitly by Ross Norman in his Metals Daily post titled Taking a Reverse View On Gold; rehosted by GoldFix here may be straightforward if not rhetorical:
China is being discrete in its purchases because they still have much more to buy.
China is being clever (surreptitiously or accidentally) to keep prices low as they acquire the bullion. Unfortunately, the simple answer given above only causes more problems in the form of follow-up questions.
For this piece we ask and attempt to answer the following:
What if China is wrong and arrogant?
Is The West ignorant of China’s actions?
Is the West exhibiting hubris in blithely ignoring China’s buying?
Is The West complicit in China’s slow accumulation?
What if China is wrong?
For starters we ask: What if the direction China is heading is just idiotic and wrong? China has miscalculated before—most notably in silver—and paid for it.
China's Unfinished Business With Silver
The Chinese silver standard, a monetary system that had stood the test of time for nearly 350 years, faced an abrupt and dramatic end in the early 20th century. This demise was largely influenced by external factors that significantly impacted China's monetary landscape.
The return of the British Empire to the gold standard1 ( yet another way to counter China’s continued hoarding of Silver to the UK’s detriment while the US also bought it) and the US Great Depression2, among other factors, contributed to the decline of the silver standard in China. As global economic dynamics shifted, China was forced to adapt to new monetary systems.
If China is anything, it is a nation that learns from history. So, wrong or not, we assume they fully know what they are getting into and move on. They could be wrong. They’ve been wrong before, even if they were made to be wrong by other nations intervening to save themselves.
They could also know the risk and just be arrogant or be hellbent on cultural revenge. Who knows. But we accept the risk ourselves and move on. China could be wrong. But so can the West.