※Translated with Notion AI. (Plus version)
Gold prices are hitting record highs.
Is this due to geopolitical risks, particularly the increasing possibility of a third Middle East war?
According to a recent FT magazine:
☞Massive purchases, primarily by China, have been driving the rise in gold prices since March.
☞The influence of Western speculators has significantly decreased.
☞Chinese trading companies, like Zhongcai Futures, have been accumulating purchases of 50 tons of gold in kind in SHFE gold futures, worth about $4B.
This exceeds 2% of the gold holdings of China’s central bank.
China is the world’s largest gold-producing country (clic).
However, it’s also a significant buyer of gold from other countries.
In other words, while producing a large amount of gold domestically, it’s also actively buying gold internationally.
Why is this the case?
I asked this question to a Chinese-American colleague from my days at a U.S. investment bank, who is now a professor at a university in Shanghai.
