There’s growing evidence that China’s role in the global gold market has broken the COMEX stranglehold on the precious metal and the subsequent price manipulation of gold. There’s been plenty of speculation that COMEX has been used by a kind of “gold cartel”—including the Fed, the Treasury, and the U.S. government—to suppress the price of gold because low gold prices are a measure of economic health and growth. High gold prices attract deeper investments in physical gold, instead of keeping money flowing into investments that keep the economy moving.
But China has become one of the biggest buyers of gold. Both the Chinese government and private Chinese investors have multiplied the amount of gold held in China. The Chinese government officially claims to own only 1,635 metric tons of gold, but most believe it’s far higher. Meanwhile, private investors continue to sink more of their savings into gold as they face tougher restrictions on international real estate and continued uncertainty at home. With a higher share of the global gold market in China, new trends are emerging, such as the relationship between gold prices and the Chinese yuan.
Another factor to consider is China’s attempts to move the oil market away from the USD by creating an oil market priced in yuan with the yuan backed by gold. This could be a major shakeup of global oil markets that have so far been dominated by the U.S. dollar. When it comes to China and gold, there’s a lot to pay attention to.
In the past, most couldn’t see much of a relationship between gold prices and the USD/CNY exchange rate. But with trade disputes escalating causing a retaliatory devaluation of the yuan, a relationship is becoming clear. A devalued yuan against the dollar means devalued gold prices. In the coming months, this is the most likely scenario as China will devalue the yuan in response to rising U.S. tariffs. The upside is less likely, depending on the yuan rising over the American dollar, something that would significantly hurt Chinese exports.
With gold prices set to fall due to the yuan, if you’ve been thinking about trading out of the gold market soon, now may be the time to do it. You can easily sell gold at SilverGoldBull.ca or other online gold dealers quickly and efficiently. Anyone keeping gold coins or gold bars in a safe at home, a safety deposit box, or allocated storage will want to use an online gold dealer to buy their gold bullion. With a dealer like Silver Gold Bull, you can get a quote for gold coins and gold bars online before shipping it. Lock in your prices and get paid fast.
No one can predict where gold prices are going to go. For all the analysts who say gold is going down, there are two more saying it’s on the verge of doubling. Trends in gold prices can last for years. Sell gold when the price make sense for your investment goals and compared to prices when you bought it.