The United States has no bottom line to print money. The 15th country officially announced the return of gold from the United States. Things have changed.
At present, the total debt deficit displayed on the following real-time clock of US Federal Treasury bonds, which looks like an airplane dashboard, has jumped three levels in a row to exceed the US$27.5 trillion mark, and the data is still growing in real time. We noticed that This is more than nine times more than when Reagan delivered his resignation speech. Goldman Sachs predicts that the US budget deficit in fiscal year 2020 alone will exceed 5 trillion.
According to Reuters Weekly statistics. In the past 34 weeks, the U.S. Treasury Department and the Federal Reserve have put more than RMB 18 trillion in liquidity and economic stimulus programs to the market to make up for the fragility of the system. According to the latest report by the Federal Reserve, the US financial system The debt has reached 81 trillion US dollars.
Deutsche Bank released a few days ago The report shows that if the U.S. authorities release watermarked money at the current rate, the Fed’s balance sheet will expand to 20 trillion U.S. dollars by about 2028. This point has become”bankrupt” and has no bottom line in its monetary policy tools. The background of printing money and maintaining the zero interest rate level until the end of 2023 is more clear, and from a deeper perspective, from the global monetary authorities to reduce the holdings of US debt And the increase in gold holdings can also illustrate this problem.
According to the latest release of the World Gold Council (WGC) one week ago According to the report, high uncertainty, loose monetary policy, extremely low interest rates, the price momentum of gold as a safe-haven asset, the depreciation of the U.S. dollar, and concerns about higher inflation have all contributed to a record inflow of funds into gold-backed ETFs in the past six months. It reached 3,785 tons, setting a new high again.
At the same time, although the global central bank’s gold purchases have slowed down in the past three months, the demand for gold as a diversified investment portfolio is expected to continue to increase in the global central bank’s international reserve assets. According to the latest report, net purchases in the first 11 months of 2020 are still more than 228 tons, and they have already purchased 650 tons of gold in 2019, reaching the level of the year when the dollar was linked to gold.
Invesco Asset Management and WGC also released survey report data last week, showing that about 18%of the world’s major central banks plan to continue to increase their gold holdings, and 23%of sovereign funds also plan to increase their gold holdings. Obviously , The recovery of the world market from the current global public health crisis will weaken the currency status and value of the dollar and force countries to rethink the role of the dollar.
The physical gold held by the monetary authority of an economy to balance the balance of payments, maintain or affect the exchange rate level, as a strategic financial asset, has a special role in stabilizing the national economy, curbing inflation, and improving international credit. As the father of macroeconomics Keynes said, gold serves as the last”guard” of the financial market and a reserve for emergency needs. Better things can be substituted.
And the above is showing that gold still plays the role of trust anchor in the global currency and financial system, hedging the risk of exposure to the US dollar and economic recession, because gold is still widely accepted around the world Hard currency, Wall Street predictor Peter Schiff further believes that such an outcome will place gold at the center of the global central bank monetary system.
But what has caught the attention of the BWC Chinese network financial team is that as of November 2020, the People’s Bank of China held 1,948.32 tons of gold, but from December 2018 to September 2019, China broke its silence. Nearly 106 tons of gold have been purchased for 10 consecutive months, and this is news that surprised the market for China’s rapid gold purchases.
For this, the chairman of the China Chief Economist Forum Ping believes that considering that China’s current economic scale is 75%of that of the United States, and China’s growth rate is relatively fast, gold accounts for only 3.6%of foreign reserves, which is much lower than the 60%-80%of developed countries such as the United States and Germany.%And the level of many emerging market countries (such as Russia). Therefore, China’s gold reserves should at least gradually increase to more than 5,000 tons, and lay a more solid credit foundation for the internationalization of the RMB.
Of course, not all central banks buying gold with economic strategic value are used for investment. This reflects that the global central banks have a clear understanding of the true value of currencies, because they have been executed for decades. Under the banner of Modern Monetary Theory (MMT) and Keynesian economism, it is still necessary to have gold’s strategic value and wealth storage method that is generally accepted around the world. What is the logic behind this?
As we have emphasized many times on different occasions, because Since human civilization, gold has always been a power bargaining chip and a measure of wealth in the economic, social and financial markets. This is also the fundamental reason why the United States needed to implement the gold standard 49 years ago (the dollar is anchored to gold and other currencies are linked to the dollar). Germany, Russia, Venezuela, Hungary, Austria, Slovakia, Turkey, Netherlands, Belgium, Switzerland, Italy, Romania, France, Australia, etc.14 It can be observed in a wave of European and emerging market countries that announced or planned to ship gold back to their countries in advance.
In this regard, the rating agency Fitch explained that the financial attributes of gold far exceed its commodity attributes, which may bring about the biggest currency change since Nixon closed the gold window, and this trend has been reflected in the recent global financial Can be found in the news.
For example, according to Ireland The media quoted Poland’s announcement three weeks ago as saying that the country entered into a top-secret airlift of gold back to the country in November last year, transporting about 8,000 gold bars from underground vaults such as the Federal Reserve and the Bank of England. This also means Poland became the 15th country to announce the return of gold, but currently there are still about 124 tons of gold in the country in the United States and the United Kingdom. Then, Polish central bank officials said that they are already making arrangements to ship all of these overseas gold reserves. Back.
In addition One of the latest developments is that, according to foreign media reports earlier, the three countries of the Netherlands, Australia and Turkey have also announced and decided to ship all gold stored in the United States back to their homeland.
At the same time, foreign media and market research institutions have been skeptical that the Fed may have sold or lent most of the gold in return through”paper gold”, or it has already been melted. Mentioned that, according to the records of research institutions, there are nearly 7,000 tons of gold stored in the underground vaults of the Federal Reserve Bank of New York from 48 countries and 12 international organizations (including the International Monetary Fund and the Bank for International Settlements). It was divided into about 540,000 gold bricks. Although the Bretton Woods monetary system collapsed more than 40 years ago, these golds remained in the United States. As shown in the vault picture shown by FT, the accounts are distinguished by numbers instead of names. , Adding a sense of mystery.
For example, a few months ago, the Federal Reserve stated that the intention was unknown After rejecting Germany’s request to review the existence of the remaining 1,268 tons of gold from the Federal Reserve, it once again aroused the attention of various countries to the safety of their own overseas gold, which also caused constant speculation in the Chinese and foreign media and the outside world. This was reported by the Russian media RT. According to China, the Fed may have blocked multiple countries including Germany, China, Turkey and Venezuela from requesting gold to be shipped back several times.
But the foreign media said that the ownership of these gold is very clear, so the United States will not risk its own national credit, and the Federal Reserve has no right to refuse countries to return their own gold, that is, If the United States wants to maintain its status as the world’s main reserve of dollars, it will not allow unsafe gold reserves to occur. At this juncture, things suddenly change.
According to American Finance The website ZeroHedge stated in a follow-up report on December 21 that the defender of the U.S. gold standard, State Assemblyman Alex Mu Two weeks ago, Mooney once again submitted a new proposal for the Gold Reserve Transparency Act (HR2559) to the U.S. Treasury Department and requested a physical audit of the gold held by the U.S. Treasury Department. Then, Mooney also boldly submitted it to the Federal Reserve. A new proposal was made to try to restore the US dollar issuance system to the gold standard and re-inject the value of gold into the US dollar.
Although we have not seen the latest news on whether these two latest proposals have received a reply, in the context of breaking the silence of many countries and continuing to send new signals and the de-dollarization of the global market, the US congressman The significance of the proposal itself is worthy of attention. (End)