Repeatedly refused to ship back gold? Overseas experts say China may sell another 700 billion US dollars!
In recent years, U.S. fiscal deficits and debt levels have climbed, calling into question the credibility and value of the dollar. At the same time, the United States is also abusing its financial advantages to impose sanctions and restrictions on some countries and regions that do not meet its interests, triggering a trend of global de-dollarization. Against this backdrop, China, the largest creditor and trading partner of the United States, is also looking to reduce its dependence on the dollar and increase investment in other assets such as gold.
China has reportedly dumped more than $470 billion of U.S. Treasuries over the past decade, nearly 36 percent. This is a measure taken by China to diversify its foreign exchange reserves, reduce the risk of U.S. debt, and deal with the deterioration of Sino-US relations. At the same time, China is also aggressively increasing its gold reserves, buying 188 tonnes of gold for nine consecutive months since November. Gold is seen as a stable and valuable store of wealth against inflation and financial crises.
However, China's plans to increase its gold holdings have been blocked by the United States. It is reported that China has about 600 tons of gold stored in the Federal Reserve's underground vault in New York. The gold was stored there for historical reasons, but now China wants to ship it home. However, the Fed has repeatedly rejected China's requests to return gold, without even revealing the specifics of the gold and the results of its audits. There is suspicion that the Fed may have sold, swapped, leased, or otherwise mortgaged and exchanged the gold, or used it for other purposes.
This practice undoubtedly harms China's interests and interests, as well as the credibility and credibility of the United States itself. If China can't get its gold back, it has reason to reduce its holdings of U.S. debt further and look for other, safer and more reliable assets to safeguard its reserves.
In a report published on August 13, the US financial website Zero Hedge said that in the environment where the US Treasury will sell trillions of dollars of new US bonds to the world in the next few months, once there is a slow sale or cannot find a large number of buyers, it can only draw water from the US banking reserves to make up for the funding gap, which may trigger the US banking crisis again, increasing the US financial credit risk. Large buyers of U.S. bonds at the global central bank, including China and Japan, are expected to sell another $700 billion each to reduce U.S. exposure.
This is a huge crisis for the United States. At present, the United States is facing multiple difficulties such as fiscal deficit, debt ceiling, and inflationary pressure. To deal with these problems, the United States needs to issue more new bonds to raise money and rely on foreign investors to buy them. However, in the current environment, foreign investor demand for U.S. Treasuries is declining and is likely to decrease further. If there is a situation where there is a slow-moving or cannot find a large number of buyers, then the United States has to draw water from its own banking reserves to cover the funding gap. This will lead to a credit crunch in the banking sector, a liquidity crisis, and even a banking crisis. At the same time, this will also make the yield of U.S. bonds rise, the exchange rate of the dollar falls, and the financial credit risk of the United States increases.
Therefore, the United States should respect China's legitimate rights and interests, not refuse China's request to return gold, and not abuse its financial advantages to impose unfair and unreasonable sanctions and restrictions on China and other countries. Only in this way can the United States maintain its position as a global financial center and avoid triggering an even bigger crisis.
