from Zero Hedge
China continued its renewed (public) gold-buying spree in May adding almost 16 tons of the precious metal to its reserve – the biggest monthly increase since January 2016.
“It’s a diversification away from the U.S. dollar, particularly given the trade tensions and the potential technology cold war that’s evolving,” said Bart Melek, global head of commodity strategy at TD Securities.
“We have to remember that gold is nobody’s liability.”
This is the sixth straight month of buying since China’s publicly reported pause.
While this figure is hotly contested as being an underestimate of Chinese State’s actual gold holdings, its the only figure available, and whatever the real number, its notable that the Chinese government has revived the trend of announcing physical gold purchases each and every month.
As Bloomberg reports, the rise reflects the government’s “determined diversification” away from dollar assets, Argonaut Securities (Asia) Ltd. analyst Helen Lau said, adding that retail demand has also picked up. At this rate of accumulation, China could buy 150 tons in 2019, according to Lau.
Finally, as BullionStar.com’s Ronan Many recently noted, with China in one of the driving seats of the world’s physical gold market, along with India and Russia in the other, it is opportune then that the London Bullion market Association (LBMA) has chosen Shenzhen in China as the location for its annual conference this coming October where they should have plenty to talk about as China’s gold market continues to fire on all cylinders. It also raises some questions such as why the international gold price continues to be established by the paper gold markets of London and the US COMEX. Maybe China prefers it that way.