Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
China’s central bank issued quotas for gold imports after a two-month pause. The short hiatus came after over a year of unprecedented gold buying. The People’s Bank of China (PBOC) has provided several major banks with new guidelines to promote gold buying. Despite record-high prices, this decisive policy signals the government’s intention to beef up its reserves.
The Numbers
- Gold prices have grown by 21% in 2024, extending beyond a record of $2,500.
- The PBOC was the largest gold buyer in 2023, scooping up 7.23 million ounces.
- China topped up its gold reserves for 18 months before the short pause.
- China holds 2,264 tons of gold with the 6th largest reserves in the world.
- Global central bank gold buying shattered records in H1 2024.
Why Investors Should Care
China might have the 6th largest gold reserves in the world, but the country has been the single largest consumer of the yellow metal for years. The PBOC’s buying habits have a large influence on gold prices. With newly implemented quotas, China is expected to restore its gold binge which could drive gold prices even higher. Investors considering a move into precious metals might want to lock in purchases at current levels before gold prices continue upward.
What’s Behind the News?
China led the charge in central bank gold buying throughout 2022 and 2023, so investors were curious about the government’s recent pause in demand. The announcement of gold quotas reaffirms the crucial role gold plays in the country’s economic and geopolitical strategy. As a leader in the de-dollarization movement, China intends to shore up its domestic currency and market stability while minimizing its reliance on the US dollar. The weaponization of the dollar through tough sanctions further spurs China’s increased reliance on gold.
Future Outlook
The World Gold Council (WGC) expects continued demand for gold “bar and coin sales in China” due to “gold’s strong performance so far in 2024, local asset uncertainty and risks associated with the economic outlook.”
More broadly, the WGC assumes “central banks will remain significant net purchasers throughout 2024.”
Scottsdale Bullion & Coin’s Sr. Advisor Steve Rand points to the unrivaled surge in central bank gold demand. “Demand for physical gold and silver is off the charts. I’ve never seen anything like it in 20 years of doing this.”
Steve Rand further explains, “Gold has a tremendous amount of upward potential [and] huge fundamentals behind it.”
Many experts are increasing their gold price predictions, expecting China’s quotes to drive up PBOC demand.