Huge GOLD News! China & Central Banks Just Declared War on Your Gold & Silver - Alasdair Macleod

Head of Research for Goldmoney, Alasdair Macleod, highlights growing gold demand in China, driven by substantial savings and limited alternatives, signaling a bullish outlook for gold prices. Regarding the ongoing trend, Macleod observes it's not just about buying gold but strategically reducing dollar holdings. In fact, since the creation of the Federal Reserve in 1912, the US dollar has lost nearly 98% of its purchasing power. The gold price, on the other hand, has multiplied a hundredfold. This may seem like a lot, but gold has just maintained its purchasing power.
From a technical viewpoint, Macleod predicts that due to limited investment alternatives like property and stocks, Chinese households will increasingly turn to gold accounts and certificates of deposit. This shift, driven by substantial household savings of approximately 35% of the country's GDP, signals a strong future demand for gold in China. The weak Chinese yuan is leading consumers to buy gold with their savings to hedge against currency risks.
Last year, China's demand for gold jewelry rose 10% from 2022 to 630 tons acquired, making the country the world's largest buyer of the commodity, according to the World Gold Council. China's demand for gold jewelry softened in the first quarter of this year because of the surge in gold prices but still held up well, according to the council.
These gold accounts allow savers to lock in their savings with returns linked to the gold price. Furthermore, Macleod emphasizes the growing shift towards gold, as seen in the increased demand on the Shanghai Gold Exchange and Shanghai Futures Exchange.
Despite attempts by central banks to lower rates, Alasdair Macleod states the interest rates will remain high due to market concerns over debt and cautious lending by highly leveraged banks. This scenario will likely lead to more business bankruptcies and a grim outlook for major currencies. On Wednesday, Fed Chair Jerome Powell concluded a second day of testimony in Washington, where he said the central bank doesn't need inflation below 2% before cutting rates.
Meanwhile, gold has surprised observers this year with record surges despite high interest rates and persistent inflation, which delayed expectations of a Fed policy shift. Robust central bank purchases, investor haven demand amid geopolitical tensions, and strong buying from Chinese consumers have bolstered prices.
Consequently, Macleod views stabilized inflation as unrealistic, given ongoing currency dilution from massive government deficits. He anticipates that any attempt to lower rates could result in even higher rates later.

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