Recently, the international gold price has surged from $1,610 all the way up to $1,940. Some netizens jokingly say that this is all due to China's relentless buying spree, which has lifted the gold prices.

Although a bit exaggerated, it does reflect a fact: Currently, from the central bank of China to our ordinary citizens, everyone is increasing their efforts to buy gold.

On the contrary, U.S. Treasury bonds, which used to account for a significant portion of our country's foreign exchange reserves, are being continuously sold off. In the recent three months, our holdings of U.S. Treasury bonds have plummeted from $971.8 billion to $870 billion, with a staggering $100 billion sold off in just three months.

Moreover, market analysts in the United States have warned that China may continue to sell off U.S. Treasury bonds in the future, potentially until they are completely cleared out.

China's move to sell U.S. Treasury bonds and buy gold at all levels is like playing a grand game of chess. What could be the strategy behind this?

01

Every Spring Festival, the sales of New Year's goods in supermarkets soar, but this year, gold shops have suddenly become crowded, with gold becoming a hot commodity for a large number of consumers to rush to buy.

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Gold has always been favored not only for its beauty but also as a financial product that many people like. Converting money in hand into gold with appreciation potential is also a popular way of managing finances at present.

Recently, a media reporter visited gold jewelry stores offline and observed that gold jewelry stores of various brands are thriving, with many people buying gold, and there have even been queues to purchase. It can be said that the stores are packed to the brim.

Some well-known gold jewelry stores have seen a shortage or even a sell-out of some products before the Spring Festival, which is enough to show how hot gold is at the moment.During the typical gold rush season, the prices of jewelry gold and investment gold tend to rise accordingly. However, this seemingly does not affect the sales volume of gold, nor does it diminish the public's fondness for gold, as it is, after all, a liquid and aesthetically pleasing commodity.

On the other hand, perhaps everyone is also responding to the "call" from the central banks to buy gold collectively.

02

Central banks from many countries around the world have also taken early action to purchase gold. In 2022, the global demand for gold once again reached a peak, surging by 18% compared to 2021. The last time there was such a significant demand for gold was in 2011.

According to official data, the global demand for gold last year was 4,740.7 tons. Central banks from around the world had a combined demand of 1,136 tons of gold. It is important to note that in the year before, global central banks only had a demand for 450 tons of gold.

The growth rate is rising sharply. The main factor behind the rapid price inflation of gold in a short period is the substantial gold purchases by central banks worldwide, as well as the common choice of people to invest in gold.

The People's Bank of China did not increase its gold reserves over the past three years, but it has started to significantly increase its holdings in the past two months. And based on past experience, once the central bank begins to buy, it is very likely to significantly increase its reserves in the short term.

From a financial perspective, our foreign exchange reserves also have ample funds to purchase more gold.

The continuously increasing trade surplus has led to more and more foreign exchange reserves. After a significant sale of U.S. Treasury bonds, we also have the corresponding funds to buy more gold.

Especially as the U.S. dollar gradually loses credibility and its status as the world's currency, we should reduce the reserves of U.S. Treasury bonds, and we could even follow Russia's example by completely clearing out U.S. Treasury bonds.03, Summary

For the general public, gold has always been a favored choice as a financial product, and it is also a popular way of managing finances.

Last year, other investments suffered losses, but gold, on the contrary, yielded good returns.

As for countries, with the global market economy being sluggish in recent years and some countries even falling into economic crises, holding more gold has become a strategy for some nations.