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Following in China’s Footsteps to Protect Your Wealth…

When you’re early with a crazy idea, you’re a conspiracy theorist. And then, when the world begins to come around to your way of thinking, no one even remembers your original thesis.

So be it.

It’s still nice to see the thesis I detailed more than a decade ago is now filtering through mainstream thinking.

That thesis: China is sitting on way more gold than the world assumes.

I say China has squirrelled away more gold than any other nation in the world—but we’ll come back to that.

Just recently, I was skimming through all my daily reading and up popped a headline from Kitco, a respected online seller of precious metals, and a respected purveyor of commodities news. This headline in question reported that “China’s secret gold purchases mean real reserves ‘more than twice’ official numbers.”

That headline was based on commentary from Jan Nieuwenhuijs at Gainesville Coins, who went on to note that…

Based on information from industry sources and my personal calculations, total gold purchases by the Chinese central bank (reported and unreported) in Q3 accounted for 179 tonnes… Its total estimated gold holdings are 5,220 tonnes, more than twice what’s officially disclosed at 2,192 tonnes. Mainly the Chinese central bank is on a voracious buying spree since 2022, and it’s obtaining way more metal than what is officially reported.”

Now, to be clear, I don’t know Jan. And I don’t know Gainesville Coins. But I do know he’s sniffing up the right tree.

Back in about 2011 or 2012, I sent out a special report to my readers stating unequivocally that China owned more gold than any other nation. At the time, China’s gold holdings were officially reported at just over 1,054 tonnes, ranking the Middle Kingdom as the fifth-largest gold holder.

But as I pointed out at the time, that was a lie. It wildly undercounted reality.

See, there are some facts you need to know when it comes to China and gold.

1. China is the world’s largest gold producer—has been since 2007.
3. China does not allow the export of gold.
5. China is regularly among the world’s largest buyers of gold on the global market.

Marry those facts, and a picture of golden wealth emerges.

Since 2010, China has produced more than 5,200 tonnes of gold. As per item #2 above, none of that leaves the country. Some of it is purchased by locals because in 2009, China began urging its people to “buy gold!”—which itself is hugely interesting because, prior to that, personal ownership of gold was illegal.

Hmmmm…

As for #3, well the thing is that much of China’s gold purchases overseas flow through Hong Kong, a fastidiously bureaucratic enclave arranged back in the day under the extremely anal-retentive eye of British bureaucrats.

The Hong Kong Census and Statistics Department houses reams of paperwork detailing every paper clip imported and every frozen egg roll exported.

So it is, then, that tracking China’s monthly gold purchases isn’t terribly challenging.

It amounts to more than 8,000 tonnes.

A wee bit of elementary school math tells us that China very likely has produced and imported well over 13,000 tonnes over the last dozen or so years—and that doesn’t take into account the gold China’s central bank already owned in 2010.

I have no idea what China’s true gold holdings amount to. But I do know that it’s much, much larger than officially reported numbers. It’s larger than Mr. Nieuwenhuijs calculates.

And I would bet it dwarfs the roughly 8,000 tonnes the Federal Reserve supposedly holds at Fort Knox. I say “supposedly” because the Fed, as a semi-private and autonomous organization, does not allow Congress to audit America’s gold reserves, despite a plentitude of requests over the decades. My suspicion—another conspiracy theory, no doubt—is that Fort Knox vaults are populated mainly with spider webs.

Whatever the case, here’s the big takeaway: China knows the Western world, led by a debt-afflicted U.S, is racing toward a fiscal/monetary cliff. And given that China plans decades in advance, the country has built up the world’s largest dollar hedge for the day when the piper pipes up.

If the greenback craters in a crisis, China’s U.S. Treasury bond holdings will suffer, sure, but the value of China’s gold will more than offset bond losses. (Also worthy to note that China has radically scaled back purchases and ownership of U.S. debt, another sign that something bigger is afoot).

My point in all of this: Buy gold. Not as an investment, but as a form of lifestyle insurance.

China’s moves are always premeditated and based on the long-game—what it sees coming years in advance.

China has been at this gold-accumulation game for more than a dozen years now. And now the fiscal situation in the U.S. is deteriorating.

Probably not a bad idea to follow the leader here.