China Sees Value In Gold, Not In The U.S. Dollar
Once the largest holder of U.S. Treasuries, China has traded out of U.S. Treasuries over the past decade while trading into physical gold. China is no fool, it has observed the United States inflating its currency at an accelerated rate over the past few years in an effort to support the debt-dependent U.S. Economy.
The first two charts detail China’s holdings of U.S. Treasuries:
The first chart from 2000 - September 1st, 2023.
The second chart from October 1st, 2013 - September 1st, 2023.
The third chart details China’s gold reserves as measured in tons.
Chart four details the money supply from 2000 - November 2023 as measured by M1. If the U.S. continues to inflate the money supply at the 2020-2022 rate, the U.S. Dollar will soon be worthless.
It is likely that the U.S. Treasury will issue approximately $9 Trillion of new debt this fiscal year to cover fiscal spending, including deficits. The Fed will likely be in the market buying Treasuries at some point this year as there likely is insufficient demand among private buyers and sovereign nations to absorb the entire $9 Trillion of new Treasury securities.
