Reuters reported on April 27 that with the US inflation rate reaching its highest level in four decades (the US Consumer Price Index CPI rose 8.5% year-on-year in March), in the US, some people have already started buying goods using gold-injected currencies. BWC Chinese network financial team analysis believes that this means that Americans have officially begun to use gold to buy goods. This is also after more and more Americans lined up to hoard gold bars and coins, and began to buy goods directly with gold. It also corroborates what we mentioned exclusively on April 26, that Americans themselves are no longer so "trusting" in the dollar. The view that the dollar is constantly losing the function of a currency anchor. In other words, Americans themselves are beginning to de-dollarize.
Goldbacks currencies are infused with gold particles in denominations ranging from 1 (1/1,000 of gold) to 50 (1/20 of an ounce).
According to the latest reuters report, Steve Allred, a business owner in Utah, is worried about the decline in the purchasing power of the dollar. Allred, like many investors, has bought gold. He also began accepting certain forms of precious metal as payment for the three hardware stores he and his brother owned. Allred is one of a group of Americans who are increasingly using gold as an alternative currency because of the potential for unprecedented federal spending and the Fed's QE to further erode the value of the dollar.
About three months ago, Allred began accepting Goldbacks at his store. The currency was infused with gold particles in denominations ranging from 1 (1/1,000 of gold) to 50 (1/20 of an ounce). During that time, Allred's customers used the gold coin to buy goods worth about $3,000-4,000.
Jeremy Cordon, founder and president of Goldback, said about a quarter to half of small businesses in Utah will accept the coin. The company has sold about $30 million nationwide, and Cordon believes Goldbacks' market share could grow to around $1 billion over the next five or six years. That is, it is expected that a share of $1 billion will be replaced by this form of gold coin and then circulated.
Not only that, but a new report from the World Gold Council shows that more and more Americans are favoring the hoarding of gold and gold coins. In the first three months of this year, the U.S. Mint sold 984,300 ounces of gold coins, reaching 80% of the 1.2 million ounces sold in all of 2021. It is worth mentioning that the US state of Utah has recognized gold and silver as legal tender in 2011, followed by Oklahoma and Arizona. Jp Cortez, policy director at the Sound Money Defense League, said 41 states in the U.S. have been fully or partially exempt from sales taxes on gold and silver, and five others are considering legislation to do the same.
According to a news report from Reuters on April 26, Swiss gold exports to the United States soared in March. Swiss gold shipments to the US surged to their highest level since May 2020 in March. Along with U.S. investors' concerns about inflation, a large amount of physical gold, including gold bars, has been hoarded.
Meanwhile, Jason Cozens, founder and CEO of gold trading and investment app Glint Pay, also saw strong demand for using gold as a currency. Glint's customers reportedly use Glint to buy gold stored in Swiss vaults and use MasterCard to spend their holdings. Cozens said about half of its 105,000 customers are in the U.S., and registered users grew 500 percent in the first quarter compared to the fourth quarter.
You know, the data from the Swiss Gold Exchange has a certain wind direction significance. The point of this meaning is that the dollar continues to lose the value of the "dollar". "The dollar we've used in less than one person's lifetime has lost most of its purchasing power, and that's what drives everything," Coxens said. Through the chart below, you can see more clearly the trend comparison between the purchasing power of the US dollar and gold.
The data shows that since 1971, the dollar has lost 86% of its purchasing power, which is what we have mentioned many times, in 1971 Nixon unilaterally announced the abolition of the Bretton Woods system gold standard, resulting in the decoupling of the dollar from gold, the dollar is like a wild horse that has lost its mind, and in the process of several QE printings by the Fed almost losing its mind, the price of gold has jumped from about $40 per ounce to $1900.
According to Fed data, the dollar in circulation is $2.25 trillion today, up from $1.80 trillion in early 2020 and more than $800 billion in 2007.
It is worth noting that since this century, gold has been increasingly valued by US consumers, the first phase was around the 2008 US financial crisis, and the second acceleration phase was during the 2020 pandemic. Because in both phases, the Fed has embarked on epic printing. In the chart below, the Fed's balance sheet is already as high as $9 trillion. And in the process, the U.S. Treasury has continued to monetize huge amounts of U.S. treasuries, and as of April 28, total U.S. federal debt has piled up to an all-time high of $30.4 trillion, at 126 percent of gdp. Over the past five years, U.S. federal net debt has increased by $9.855 trillion, or 49.5 percent.
The new change in things is that the water released by the Fed is about to face recovery, and many bankers such as Fed Chairman Powell believe that it is necessary to curb the high inflation in the United States by raising interest rates and reducing the balance sheet at this time. St. Louis Fed President Bullard recently raised the possibility of a 75 basis point rate hike, a move the Fed has not taken since 1994. In addition, it is also implied that the balance sheet will be reduced at a monthly scale of 95 billion in May. However, in the view of Goldman Sachs analysts, this will make dollar-like assets such as US treasuries more and more unpopular, and then turn to gold-like currency assets.
The ANALYSIS financial website Zerohedge believes that in the us dollar continues to lose its reserve status, the main buyers or will gradually sell 20% of the US treasury, if the risk factor increases, or there will be a possibility of clearing the US treasury. According to the latest report released by the U.S. Treasury Department in April, TIC (U.S. Treasury Holdings Report Will Be Delayed for Two Months), in February, global central banks sold a net $16 billion in U.S. Treasuries.
It is worth mentioning that China continued to reduce its holdings of US$5.3 billion in February after reducing its holdings of US$12.2 billion and US$8.6 billion in December last year and US$8.6 billion respectively, and currently holds US$1.0548 trillion, which is still the second largest overseas holder of US bonds. That is to say, as of February this year, China has reduced its holdings of US Treasuries for three consecutive months, and the cumulative scale of reductions in these three months is about $26 billion. From a longer cycle point of view, compared with the $1.1042 trillion held in February last year, the us treasury has been reduced by a total of $49.4 billion in the past 12 months.
At the same time, we also note that just as Americans themselves are beginning to buy commodities through the use of gold and de-dollarization, and the world's major central banks are beginning to de-U.S. debt-de-debtization, the World Gold Council's latest Global Gold Demand Trends Report released on April 28 shows that total global gold demand (excluding over-the-counter transactions) increased by 34% year-on-year in the first quarter, reaching a total of 1234t, the highest quarterly level since the fourth quarter of 2018.
Meanwhile, total gold-backed ETF holdings grew 269t this quarter, the highest level since Q3 2020. Total global bar and coin demand was 282t, 11% above its five-year average quarterly level. The latest data also show that the official gold reserves of central banks increased by 84t in the first quarter of 2022, although 29% lower than the same period last year, but net gold purchases more than doubled month-on-month.
The association's report two weeks ago also showed that total holdings of China's gold-backed ETFs rose to 61.8t in March, up 2.4t from the end of February. At the same time, three new gold-backed ETFs are listed, expanding the selection to 15 gold-backed ETFs. F。
Not only that, the World Gold Council also cited customs data showing that China imported 67 tons of gold in February, down 41% month-on-month. That is to say, about 180 tons of imported gold were shipped from overseas to China in the first two months of this year. The association also cited another set of customs data showing that China imported 818 tons of gold in 2021, 36% higher than in 2020 and close to the level of 2019. Adding up the above data, it is not difficult to find that in the 38 months from 2019 to February this year, at least about 2,300 tons of gold have been transported from overseas to China.
On the other hand, many central banks around the world are also speeding up the process of shipping gold back from overseas vaults such as the Federal Reserve for their own safekeeping. So far, at least 13 countries, including France, Germany, Italy, Venezuela, the Netherlands, Switzerland, Austria, Belgium, Turkey, Australia, Hungary, Poland, Slovakia, etc., have announced that some gold has been shipped back from overseas vaults such as the Federal Reserve and the Bank of England or plans to ship back gold reserves for their own safekeeping. According to the Fed's latest report two weeks ago, the amount of gold held by the Fed for the world's central banks has fallen to a new low of 5738.15 tons, compared with the previous high of 7000 tons of gold, a total of about 1262 tons were shipped out of the New York vault.
Another recent development is that the latest news from the US financial website Zerohedge on April 17 shows that France has shipped back all its currency, gold. The US media said that the Bank of France secretly repatriated 221 tons of gold between 2013 and 2016. Since then, all its monetary gold has been deposited in La Souterraine in Paris.
US media said that France has shipped back all its currency gold
The analysis believes that under the background that more and more Americans have begun to de-dollarize and replace the dollar with gold, more and more depositors around the world may take gold from the Federal Reserve. Based on the fact that ownership is very clear at the time of deposit, the Fed will not be able to prevent multiple countries from shipping back their gold for any reason at any time. (End)