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The central bank spent 12 billion yuan in gold.

April 15, 2019 08:51
source: International financial newspaper

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Summary
[China's central bank spends 12 billion yuan in gold and Chinese aunts tangled up] In 2013, China's aunt took hundreds of billions of dollars to sweep hundreds of tons of gold, followed by years of "deep-hungry." After six years of gold, with the rise of the international gold price, it finally greeted the "solution." On the other hand, the central bank spent 12 billion yuan to increase its holdings of gold in the past four months, and China’s aunts are entangled in whether to “get off the bus”. (International Finance News)

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Back in 2013, China’s aunts swept hundreds of tons of gold with billions of dollars, followed by years of “deep-holding”. After six years of gold, with the rise of the international gold price, it finally greeted the "solution." On the other hand, the central bank spent 12 billion yuan to increase its holdings of gold in the past four months, and China’s aunts are entangled in whether to “get off the bus”.

Buy and buy!

Recently, the People's Bank of China continued to purchase gold. According to data released by the central bank, as of the end of March 2019, China's official gold reserves reached 60.62 million ounces.

Of course, this "golden trend" is not only China, but central banks have become gold "fans." So, what is the central bank’s crazy “gold rush”? For many years, the "Chinese aunt" of Jin Jin has finally ushered in a solution?

Costing 12 billion yuan to buy gold

During the period from November 2016 to November 2018, the People's Bank of China did not increase its gold reserves for two years. Since December 2018, the central bank has increased its gold reserves for four consecutive months.

According to the latest data released by the People's Bank of China, as of the end of March 2019, China's official gold reserves were 60.62 million ounces (about 1885.49 tons), an increase of 360,000 ounces.

Data show that from December 2018 to March 2019, the People's Bank of China increased its holdings by 320,000, 380,000, 320,000, and 360,000 ounces each month, totaling 1.38 million ounces. As of April 12, the press issue was received.US economic dataThe strong impact, the dollar continued to rise, the current price of London gold fell to 1,292 US dollars / ounce.

At a price of $1,300 per ounce, 1.38 million ounces of gold is roughly equivalent to $1.79 billion, and according to the offshore renminbi exchange rate, $1.79 billion is about $12.28 billion. In other words, the People's Bank of China spent more than RMB 12.034 billion over the past four months to increase its gold reserves.

Over the past ten years, the gold has increased

Looking back at China's gold reserves data for the past decade, the Chinese central bank has four times of holdings. The largest increase was in June 2015, with an increase of 19.43 million ounces and continued to increase in the following 10 months.

Since 2012, the gold bear market has been going on for seven years. In 2015, the price of gold was close to the waist, hitting a low of $1,046 per ounce, and that was the starting point for the central bank to start the last round of gold holdings.

In the fourth quarter of 2018, global risk assets were retreated, and gold once again “flashed” and outperformed most of the world's assets.

Baocheng FuturesAnalystIt is believed that the central bank did not buy gold for more than two years, because this period of time is in the US dollar rate hike cycle, and the recent Fed "doves" sound frequency has a bullish effect on gold. In addition, central banks in major economies around the world have releasedcurrencyWith the loose signal, the actual value of financial assets will shrink to a certain extent, and the function of gold preservation and appreciation will become more prominent.

In addition, geopolitical and economic uncertainties have prompted more and more central banksforeign exchange reservesdiversification. "Forbes" financial writer Frank Holmes believes that central banks want to reduce the holdings of the dollar by buying gold. Diversification of foreign exchange reserves is one of the main motives for these purchases.

A senior gold trader told the International Finance News that the US side has brought some positive benefits to the gold price. On the one hand, the US non-farm payrolls data performed better, alleviating concerns about a sudden slowdown in economic activity, but wages rose moderately, supporting the Fed’s decision to suspend further interest rate hikes this year. On the other hand, US President Trump has repeatedly called for the Fed to cut interest rates and adopt other unconventional measures to ease the pressure on the economy.

Central banks "gold rush"

In addition to the People's Bank of China, central banks in other countries are also increasing their holdings of gold. Compared with the 2017 data, the central banks have nearly doubled their purchases of gold, once again becoming a big buyer in the gold market. 2018 is the year in which the world's central banks have the highest gold purchases in the past 50 years.

According to the "Gold Demand Report of 2018" issued by the World Gold Council, the amount of gold purchased by major central banks in the world increased by 74% in 2018. In 2018, global gold demand increased by 4% to 4345.1 tons, which is basically the same as the five-year average of the global market. Under the condition that global demand for gold ornaments is basically stable, the demand in the Chinese market has rebounded to a new high in three years.

At the same time, the latest data shows that in March 2019, global goldETFThe total gold holdings of similar products and products increased slightly by 3 tons to 2,483 tons, equivalent to an inflow of 183 million US dollars.

The Russian central bank increased its gold reserves by 14.9% (nearly 275 tons) in 2018, making it the fifth-largest gold reserve country in the world after the United States, Germany, Italy and France. The US gold reserve is 8,130 tons, Germany is 3,370 tons, Italy is 2,450 tons, and France is 2,540 tons.

In addition, some countries that have not favored gold for a long time have joined the gold-buying team. The Polish central bank's gold reserves reached its highest level in 35 years; the Hungarian central bank increased its holdings of gold for the first time in 32 years, and its gold reserves soared from 3.1 tons to 31.5 tons in 2018.

At present, the United States, Germany, Italy, France, Russia, China, and Switzerland are among the seven countries with the largest official gold reserves, all of which are above 1,000 tons.

Chinese aunt finally welcomes the "solution"

At present, it seems that the global central bank has become the biggest buyer. In addition, the Fed’s dovish is bullish for gold. Is the gold bull market coming? There is a constant voice on the Internet that the aunts who robbed the gold tide in 2013 will now be able to solve the problem. However, with the take of the central bank, will the Chinese aunt choose to “get off”?

In this regard, "International Finance News" reporter interviewed Zhou Yingxi, general manager of Beijing Jinhai Lanshi Investment Consulting Co., Ltd. He said: "There is no solution. For Chinese aunts, gold falls only in price, and does not affect their affirmation of the value of gold. The act of buying gold may be crazy, but it is not affected by short-term market fluctuations after purchase. The mentality is calm."

For further analysis, from 2013 to the present, there have been multiple opportunities for prices to return to the 2013 gold price range. Chinese aunts are neither technical nor macro. For them, buying gold and gold jewelry may not be for low-buy and high-selling to earn the difference, but for weddings and other festive occasions. Losses and regrets have been replaced by pleasant emotional values. In the long run, Chinese gold aunts are the real value investing practitioners.

No matter which investment method, there are advantages and disadvantages, paper gold, physical gold, gold ETFfundThe stocks of the gold concept, etc., are all earning corresponding gains after the price of gold rises. As long as it is within the psychological tolerance, with the corresponding knowledge and risk control capabilities, and a rational understanding of profit and loss can participate.

The Galaxy Futures Institute advised: As a hedging tool, the amount of money and risk appetite of ordinary investors such as “China Aunt” determine the proportion of its gold allocation. For investors with relatively low household income and insufficient investment experience, it is better to allocate gold in the low position, which can account for about 30% of the investment capital allocation; and for investment with large capital and investment experience. In terms of the situation, the ratio of gold can be reduced according to its own situation.

Shen Xinjie, a precious metals analyst at Shenyin Wanguo Futures, told the International Finance News reporter: “Compared with other assets, gold is less volatile and can optimize the risk-return and diversity of the portfolio, especially in the global economy. There is excellent performance in the environment of slowing down expectations and rising geopolitical risks."

Extended reading>>>

  What information is revealed by Russia and China's holding of gold?

  "Country sitting on the gold mine", the gold is about to be finished.

  World Gold Council CEO TEDA Wei: optimistic about gold ETFs and related derivatives

(Article source: International Finance News)

                (Editor: DF318)

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