In just 2 years, the world gold price has increased from 1,600 USD to more than 4,000 USD/ounce, marking one of the strongest increases in modern history.
While many see this as a result of global economic instability, there are signs that China is playing a big role in this turning point change.
In the 1990s, many Western countries considered gold a "set of the past". The UK, Canada and Australia are all selling off most of their gold reserves. However, the times have changed.
After the West froze about $300 billion in Russian assets in 2022, Beijing quickly learned a lesson: "Gold cannot be sanctioned, and is a shield against the weaponization of the US dollar" - financial expert Simon Ree, who worked at Goldman Sachs and Citibank, commented.
Since then, the Chinese Central Bank and many other countries have been buying gold heavily. If in 2019, the net purchases of central banks were only about 600 tons, then by mid-2023, this figure will exceed 1,300 tons - the highest in modern history.
Observers say that Beijing not only buys gold for reserves, but also wants to become the " world's iron bar", keeping gold in favor of other countries to strengthen financial position. The fact that countries deposit gold in China will be a sign of increased confidence and geopolitical influence.
According to Torsten Slok - chief economist at Apollo Global Management, China is one of the factors contributing to the gold price increase. According to Mr. Slok, Central Bank of China, investment funds and households are simultaneously increasing their gold purchases. The combination of speculation, hoarding and safe-haven demand has pushed gold prices to unprecedented levels.
In fact, many Chinese cities have seen people lining up to buy gold, showing that the "hiding" mentality is spreading in society amid declining confidence in the USD.
Legendary investor Ray Dalio - founder of Bridgewater Associates (USA) - recently commented that gold is gradually replacing US Treasury bonds as a safe asset. Historically, gold is still the least risky asset of any currency.
If this trend continues, financial order based on the US dollar and US bonds - which have dominated for half a century - could be shaken. Although a "new golden era" has not yet taken shape, its shadow is already low in the international market.
However, many experts warn that gold prices may be in a bubble of speculation, as the psychology of hoarding spreads from central banks to the people. But if this is not a bubble, this golden fever could open a completely new chapter in the history of global currency.
At the end of last week's session, the world gold price was trading at 4,113.48 USD/ounce.
Regarding domestic gold prices, SJC gold bar prices are trading at 148.2 - 149.2 million VND/tael (buy - sell).
The price of 9999 Bao Tin Minh Chau gold rings is trading around 150 - 153 million VND/tael (buy - sell).
