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Gold Price Cracks $2,300 oz and Holds Steady

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The price of gold rallied past $2,300 per ounce on Thursday, shocking retail investors and marking a new all time high for the shiny metal. During mid day trading today, the price was holding steady above $2,320.

It’s no secret that in recent years central banks have been buying gold. Last year, China’s central bank ran through several rounds of gold buying, acquiring 225 metric tons, representing roughly 25% of the overall central bank purchases of 1037 tons acquired by governments’ last year.

Reports are surfacing that China could be sitting on an unpublished stash exceeding 5,300 tons of gold bars, doubling the 2,235.39 tons in the holdings reported through Internation Monetary Fund statistics.

Despite recent reports of positive economic data, inflation remains rampant with interest rates stuck at the highest levels in decades. The inflation problem continues to baffle the Federal Reserve, with recent remarks from Chairman Powell suggest that they may be reconsidering a rate cut in the near future.

With gold investing seeing a resurgence in popularity among Gen Z in China, the Wall Street Journal is reporting that Millennial investors are the leading buyers of Costco gold bars. According to the study, a growing number of Millennials recognize gold as a store of value and hedge against economic uncertainty, with the average having up to 17% of their net worth in gold. While Baby Boomers allocate only around 10%.

Gold has historically been seen as an effective hedge against inflation. The ongoing dedollarization efforts driven by BRICS have played a roll in driving the price higher. When currency values decline, gold prices rise helping to preserve purchasing power.

For retail investors, Gold Coins are one of the most highly liquid tangible asset. Coins are widely recognized and can be easily bought and sold from online bullion dealers, local coin shops and others.

Gold coins are minted in a variety of industry standard weight denominations that enable investors with varying budgets to participate in the gold market.

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Shanghai Gold Price Ends the Year over $2,100 per ounce

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The gold price, along with that of other precious metals, is largely driven by commercial bankers and brokers involved in the trading of commodities in various futures markets throughout the world. The three largest gold trading markets are in London, New York and Shanghai.

In the US, we typically track and trade gold based on the New York gold price that is part of the market managed by COMEX and the CME Group. For decades, the price of gold in New York has been heavily manipulated by the large commercial Wall Street banks. This has been well documented in recent years, with many traders from JP Morgan Chase and others having been convicted.

Corruption by members of the LBMA and COMEX and price manipulation on a global scale has been one of the issues brought forth by the BRICS alliance as a leading driver of dedollarization in recent years, which has led to a growing number of local currency trade agreements. These new trade agreements are instead backed by central bank gold reserves and not the petrodollar.

This week, the Shanghai Gold Price topped the $2,100 per ounce resistance, closing the year at a record breaking $2,118.20 per ounce, the highest price per ounce in history.

The Shanghai Gold Exchange is one of the largest physical gold trading exchanges in the world. Established in 2002 in Shanghai, China, it facilitates the trading, clearing, delivery, and storage of gold and other precious metals. The SGE plays a significant role in the Chinese gold market, and has become of the the most influential gold markets globally.

China is a both a major consumer and significant producer of gold. The SGE, being the primary gold trading platform in China, reflects the country’s demand and supply, influencing global market perceptions and, subsequently, prices.

As one of the largest markets for physical gold, the demand and supply dynamics in the SGE can have a ripple effect on global gold prices.

Unlike the New York and London exchanges that trade primarily in paper gold derivatives and futures contracts, the SGE deals largely in physical gold.

This focus on physical gold can lead to different price dynamics compared to markets where paper gold (gold futures and derivatives) is traded.

As gold prices in various markets diverge, more gold miners and refineries are likely to ship more product to markets where they are likely to get a better price. This is likely to lead to further draining of gold from the LBMA and COMEX managed vaults.