China really loves gold - and it understands gold better than any Western nation.
It's no secret that the People's Bank of China has been buying the yellow metal for years, shoring up its reserves. And the country's central bank may have been buying for decades before it became at least a little more transparent.
Recently, however, the Chinese central bank has been among the world's most aggressive buyers of gold.
In fact, there are some clues that point to the fact that their actual gold holdings are a multiple of what's actually being reported in the financial press, which in turn points to a shocking long-term strategy: a move to link or back the yuan with gold.
The implications of this would send shockwaves through the world economy, so it makes sense to start getting ready to profit right now...
China and Russia Are Leading the Charge to Buy Gold
For nearly 20 straight years until 2009 and 2010, central banks were net sellers of gold. Between 2003 and 2008, central bankers sold 2,846 metric tons of gold.
And then, as the world was exiting the worst of the financial crisis, something strange happened: The trend reversed in a sea change for the gold markets. Between 2009 and 2014, the banks bought 2,301 metric tons, making for a 5,147 metric ton swing to the upside.
According to the World Gold Council, they bought 477 metric tons in 2014 alone, the second-highest level in 50 years and a 17% jump over 2013.
Now, both China and Russia have accumulated large proportions of their central bank reserves in U.S. Treasuries, and they're growing increasingly anxious to diversify away from that "asset." Gold makes for a great alternative, especially after such a sizeable decline in price over the past four years.
Russia alone gobbled up a whopping 173 tons last year, adding 10 to 25 tons monthly in the past five years.
And, after six years with no updates, China finally broke its silence to announce a 60% increase in reserves to 1,658 metric tons. In the third quarter of 2014, they added another 50 metric tons.
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