Interesting, and the point is well made, but at the end of the day China doesn’t need to raise USD to bail out Yuan debt and holding gold is a setup for a massive peak until the risks are known and then it’s dumped. Bonds have yield that generate continuous income, and if you a not seeking to have conflict with US sanctions are irrelevant and thus you favor income over sovereignty. You use gold to buy raw materials the purveyor of those raw materials will convert to USD to procure other goods from private sectors that only accept fiat for their goods and to pay their tax masters.
Worth noting that the Treasury changed the methodology of how it reports TIC data in February 2023 https://x.com/SantiagoAuFund/status/1715405048451051693?s=20
Has China really been selling treasuries or do they just have a huge market to market loss on the treasury portfolio?
Great article!
Good one! There's the idea of where you can even go in case of a conflict as safe haven or safer haven, beyond gold perhaps, and it's a hard question.
Interesting, and the point is well made, but at the end of the day China doesn’t need to raise USD to bail out Yuan debt and holding gold is a setup for a massive peak until the risks are known and then it’s dumped. Bonds have yield that generate continuous income, and if you a not seeking to have conflict with US sanctions are irrelevant and thus you favor income over sovereignty. You use gold to buy raw materials the purveyor of those raw materials will convert to USD to procure other goods from private sectors that only accept fiat for their goods and to pay their tax masters.