China's Bold Crypto Move: Purchasing 225 Tonnes of Gold Worth $13.2B

• China's Unprecedented Gold Accumulation: An Analysis
• Gold Purchases by BRICS Members
• China's Mystery Gold Accumulation
• Could China's Gold Back a New BRICS Currency?
• The US Dollar and Potential BRICS Currency

China's Unprecedented Gold Accumulation: An Analysis

The latest data demonstrates that China, a BRICS member, has been on a significant gold purchasing spree, increasing its reserves by 225 tonnes in the year 2023 alone. This amounted to a staggering $13.2 billion in gold stockpiled by China in the previous year. The nation has consistently bought gold since 2022, adding millions worth of the precious metal to its reserves every month. In December of the prior year, China went on to accumulate an additional 9 tonnes of gold, valued at $532 million.

Gold Purchases by BRICS Members

Aside from China, other BRICS countries such as India, Russia, and Brazil are also progressively buying gold. In 2023, BRICS was confirmed as the largest purchaser of gold, outpacing all other countries as reported by the World Gold Council. Ranking the BRICS nations, China leads the pack in gold acquisition, followed subsequently by Russia and India.

China's Mystery Gold Accumulation

The exact reasoning behind China's massive accumulation of gold in its reserves is yet to be understood. Though some suggest the move might be aiming to diversify its reserves ahead of a potential downturn, others propose the gold could serve to back the upcoming BRICS currency.

Could China's Gold Back a New BRICS Currency?

China initiated a de-dollarization campaign in the previous year, encouraging developing countries to move away from the US dollar. If BRICS were to back their upcoming currency with gold, it could provide initial strength to the new tender within currency markets. However, this approach may only be sustainable in the short term, as a rising US dollar could potentially destabilize the currency.

The US Dollar and Potential BRICS Currency

Despite a dip in January, the US dollar has several opportunities for recovery in the weeks to follow. Consequently, backing the new BRICS currency with gold could be a risky strategy, potentially leading to instability in the foreign exchange markets.

Edited by Jonathan Stoker