The Fed will announce its latest monetary policy decision on Wednesday afternoon local time, the market is expected to announce that november to start a debt reduction and end in mid-2022, the US Department of Labor released the September core PCE price index on October 29 at an annual rate of 3.6%, the data is slightly less than expected (3.7%), but the inflation level is still much higher than the 2% target set by the Fed, and the market's expectations for the Fed to accelerate the tightening of monetary policy are expected to deepen. The core PCE price index is an important reference indicator for the Fed to formulate policy.
Indeed, after Fed Chairman Jerome Powell hinted at concerns about inflation at an online event hosted by the South African Bank on Oct. 23, investors were increasingly concerned that rising cost pressures and bottlenecks in global supply chains would prompt the Fed to raise rates faster than expected, saying supply bottlenecks could last longer and spur higher inflation, which is clearly a risk now (no longer deny inflation).
Although the United States approved an additional $480 billion in borrowing to the Treasury Department a week ago to support the funding deadline until early December to avoid a debt default on October 18, the US debt default will still be a recurrence of the problem at the end of 2021, and once it does, it will be another heavier impact on the dollar reserve status, and it is clear that the US Treasury and the Federal Reserve are cash monetizing the larger debt deficit, in fact, This will become even clearer against the backdrop of the Fed's assertion that inflation is temporary and a formal soft concede, and the fig leaf of sustained high inflation in the United States is debunked.
Following the high September core PCE price index, data released by the U.S. Department of Labor on October 14 showed that the U.S. CPI rose again to 5.4% (5.3% in the previous two months) after two consecutive months of slowing growth, far exceeding market expectations and the biggest gain since April 2020. Another data also shows that the era of big inflation in the United States is coming, and the core PCE inflation indicator for August released by the US Department of Labor on October 1 rose by 3.62%, which is the highest data since May 1991, and the market expects the US inflation rate to reach more than 6% in October.
In this regard, Singapore's premier gold trader Ronan Manley told Russian media RT a week ago that it is clear that when the global financial market really needs to solve the US ultra-high debt deficit, it may reset and will be pegged to gold, which also means that in the next two to three years, the dollar is likely to be beaten back into a new round of weak cycle, prompting the global market to find alternatives.
According to the latest data released by the IMF in October, the share of the US dollar in countries' foreign reserves has fallen from a high of 73% in 1970 to the current 59.2% (59.5% in the first quarter of 2021), falling to the lowest value in 25 years. At the same time, the US dollar's 38.35% payment share in the international clearing and exchange system swift also continued to decline, and was overtaken by the euro in May, which accounted for 39.03%, because it is expected that future changes in the exchange rate regimes of Europe and emerging markets may trigger a major shift in the global monetary order.
This is made clearer in the context of the Fed's continued rise in monetary policy due to inflation data, which is close to formal softness, and it is an indisputable fact that the real value of the US dollar is getting lower and lower, driving the global central bank's demand for gold. So, this explains why central banks around the world are reconsidering making local currencies and gold more useful, and many countries are reminded of gold previously stored in overseas vaults such as the United States and the United Kingdom.
According to Russian media RT a few weeks ago, when the Bundesbank wanted to review the remaining 1260 tons of gold in the Fed a few months ago, but was rejected by the latter on the grounds of unclear intentions, it triggered many countries to start accelerating the purchase of gold or announcing that they would ship gold overseas.
Subsequently, according to RT reports, China, Russia, India, Brazil and South Africa will officially break the dominance of physical gold pricing by the US dollar and establish a new world currency gold trading system, thus bypassing the GOLD market dominated by the United States and Britain.
According to Shi Anli, the former CEO of the World Gold Council, China has become a leader in the international gold market and will determine the future development of the international gold market. The latest data show that China's gold reserves at the end of September were 1948.32 tons, the same as last month, it is clear that China's holdings of less than 2,000 tons of gold is only equivalent to 3.4% of the total foreign reserves, while the United States and Germany's gold accounted for 78% and 75.2% of the international reserves respectively, there is a considerable gap, which also provides enough space for the next increase in gold, and will provide a new trading venue and road for the joint appreciation of gold in China, Russia, Europe and some emerging markets.
Sergei Shvetsov, the first deputy governor of the Russian Central Bank, has confirmed the matter, saying that in the current global gold market system, London and New York are of diminishing importance, while the Orient is developing rapidly, because the pricing method of the us dollar-dominated international gold market is determined by the artificial trading environment of Wall Street and has little to do with the real needs of the gold market.
There is no doubt that Russia and many other countries regard gold as an important foreign reserve and monetary asset, because this can provide Russia with wealth and monetary power independent of the external financial market, coincidentally, the Russian finance minister appeared earlier in a symposium program on Russia's first channel, and issued a warning to the United States and Europe, "If our gold and foreign exchange reserves are seized, even if there is such an idea, then it is equivalent to declaring war in the financial field."
Just two weeks ago, Russian authorities announced that they would completely divest their dollar share of their national wealth fund to replace assets such as renminbi, euros and gold, warning that the world should not be dominated by one currency and that we are building our own national payment system.
This can be seen in the wave of 14 European and emerging market countries in Recent Years, including Germany, the Netherlands, Belgium, Switzerland, Venezuela, Russia, Turkey, Hungary, Slovakia, Italy, Romania, Austria, Australia, and France, announcing or planning to ship gold home in advance.
Global central bank official gold reserves net increased by 28.4t in August against the backdrop of COVID-19, dilution of the value of the US dollar, sharp rise in US Treasury yields and hedging tail risks, rising debt levels and high US inflation, which also led to a net purchase of 391.5 tonnes of gold by global central banks from January to August 2021, 63% higher than the same period last year and 39% higher than the semi-annual average of the last five years, according to the latest data from the World Gold Council's latest gold demand report released a week ago. Even, a month ago, the Dutch central bank wrote an article suggesting that gold could serve as a basis for building a monetary system again.
Data released by the World Gold Council on October 28 showed that in September, China's gold ETFs experienced a fourth consecutive month of capital inflows of 73t, the second highest on record. The data also shows that in August, the gold (futures) trading volume of the Shanghai Gold Exchange and the Shanghai Futures Exchange was 4163 tons, an increase of 6.5% over the previous month, and the data also showed that China's gold imports in July were 66.6 tons, which also made the total import volume from April to July reach 312 tons, an increase of 200 tons over last year. According to the data, in the first half of 2021, China's actual consumption of gold was 547.05 tons, an increase of 69.21% compared with the same period in 2020.
According to a follow-up report quoted by the US financial website zerohedge on October 12, Switzerland's gold exports to the Chinese market also soared to the highest since 2019 from April to September, of which the most recent batch of about 180 tons of gold has arrived in China from Europe and the United States between August and September, and hundreds of tons of gold have flowed into China every year, which shows that a large amount of gold has recently been shipped and arrived in China.
Map of the scene of the Central Bank of Poland airlifting gold home
The latest development is that the country aired back 8,000 gold bars from overseas vaults such as the Federal Reserve and the Bank of England with multiple late-night flights, according to Irish media two weeks ago, citing news posted by central Bank of Poland officials on social media, which also means that Poland has become the 15th country to officially announce the return of gold, but there are still 123.6 tons of gold left in the Bank of England and the Federal Reserve. (End)