Venture capitalist Chamath Palihapitiya says China's relentless appetite for gold underscores a significant shift in global sentiments, as both governments and people seek to hedge against mounting geopolitical and economic risks.
People And Governments Turn To Hard Assets
On Wednesday, in a post on X, Palihapitiya said, “when geopolitical & socio-economic tensions rise, both people & nations turn to hard assets,” while pointing to China’s central bank gold purchases, which has been a key player in the recent wave of gold accumulation.
“One big buyer in particular has been Beijing. China has been swapping Treasuries for gold for years, lifting reserves to over 74m ounces,” he said.
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Palihapitiya described this move as “a reflection of both state policy and popular sentiment: hedging against dollar risk, sanctions, and China's own shaky property and stock markets.”
The rising central bank demand for gold, alongside that from institutional and individual investors, has led to a monumental surge in gold prices, which is up 53.84% year-to-date. Palihapitiya frames this as “a signal of rising uncertainty in the world.”
Gold Could ‘Go To $20,000’
Economist Peter Schiff said in an interview this week that the yellow metal “is not going to stop going up because the dollar is not going to stop going down,” while making the case for it to go higher, saying “it could go to $20,000.”
Others, such as cryptocurrency analyst Michaël van de Poppe, have termed gold’s year-to-date rally as being “very unusual.” He said that on average, the commodity rises between 6% to 8% yearly, and as such, he said “we're going to see a significant correction” in a post on X.
Billionaire hedge fund manager Kenneth Griffin said that investors beginning to view gold as a safer asset relative to the U.S. Dollar is “really concerning” to him.
“We're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize or derisk their portfolios vis-a-vis US sovereign risk,” he said.
Gold prices are down 0.10% on Thursday, trading at $4,038.45, after pulling back from its new all-time high of $4059.38. The commodity is now up 11.07% over the past month and 53.85% year-to-date.
Photo Courtesy: maoyunping on Shutterstock.com
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