China imported a record amount of gold because the Chinese government doesn't trust the dollar and Chinese households don't trust anything else. This is somehow news.
Beijing spent decades accumulating dollars. Now they're buying metal that sits in vaults and does nothing. The financial press calls this diversification. I call it swapping one anxiety for another. At least dollars pay interest. Gold just sits there looking smug.
Chinese households are piling into gold because their stock market is a dumpster fire and their property sector collapsed harder than a retail trader's portfolio after reading one bullish Reddit post. So they're buying jewelry and bars like it's 1850. Nothing says modern financial sophistication like hoarding the same asset cavemen thought was pretty.
The article claims this means gold prices will go up. Bold prediction. A billion people buying something might increase demand. Someone get this analyst a Fields Medal.
Retail traders are now convinced they've cracked the code. China buys gold, so I buy gold, so I get rich. Flawless logic. These are the same people who bought GameStop at $400 because someone on the internet said it was going to $1,000. Now they're goldbugs. Next month they'll be trading pork belly futures because some TikTok guru told them bacon is the new Bitcoin.
The real joke is watching Americans panic-buy gold ETFs because China is doing it. Imagine basing your investment strategy on copying a government that also banned Winnie the Pooh. That's the level of critical thinking we're dealing with.
Gold doesn't pay dividends. It doesn't generate cash flow. It doesn't do anything except cost money to store and insure. But sure, let's all pretend it's a brilliant hedge against inflation while ignoring that it dropped 20% in 2013 when everyone said the same thing.
China's buying gold to escape dollar dependency, and retail traders are buying gold to escape their jobs. Only one of these groups understands what they're doing, and it's not the guy with a Robinhood account.
Photo by Eric Prouzet on Unsplash
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