Hello, Steve Jobe. Thanks for your comment. I have to admit, I imagined it would only be a matter of time before the so-called “hoarding” carried out by China and Russia would be mentioned as a counterpoint in response to my article. I appreciate the opportunity to discuss it.
Here are some further thoughts on the matter:
~ As I already pointed out in my post above, the United States also owns a great deal of gold.
~ China has to do something with its reserves. As it continues to grow in wealth, it continues to purchase US treasuries as well, maintaining a diversified portfolio as always. That’s their interest — maintaining a diversified portfolio. Hence the gold. Hence why I mention it at the end of my article as a portfolio holding that’s not well-correlated with other assets and probably worth it for the purposes of diversification. Separately, it is being reported that the value of China’s gold holdings in their forex reserves fell as of the end of June, most likely due to sliding gold prices. If they had been hoarding it, we should be observing a rise in the value of their holdings since pricing hasn’t been that volatile recently, I would think.
~ There is often zero evidence that countries like China and Russia are actually “hoarding” gold. Such “news” typically constitutes a red herring attempt to influence the markets. See this chart for China’s gold reserves <https://tradingeconomics.com/china/gold-reserves>, which demonstrates consistent purchasing, not “hoarding”, and this chart for Russia <https://tradingeconomics.com/russia/gold-reserves>.
~ China and Russia are growth countries. They need to put the wealth they accumulate somewhere. Gold is but one of the assets they invest in. It has very little to do with “hoarding”, so far as we can tell.
~ The real question is, are countries’ gold holdings growing relative to their holdings of US Treasuries or other assets? What are their gold holdings as percentages of their total foreign exchange reserves? Are they increasing? Show me evidence that they are, and that will give us something to discuss.
In me, you will find no mouthpiece for any industry. I am an independent thinker. Are you, as well? If so, I welcome debate…