World governments are facing political and economic turmoil. While not every government is headed into direct chaos, a number of top governments are facing major political or economic problems. This not only affects them but also trickles down to other governments. Like in the 2008 financial crisis, the whole world felt the effect despite it happening in the powerful countries only. Once again, in recent months and years, there have been signs that the world is headed for another crisis.
Now it seems that China is already preparing for such an eventuality. Data from the People’s Bank of China shows that the country has been loading up on gold.
The numbers, 62.64 million ounces in September from 62.45 million in August.
This began when the country got locked into a trade war with China last year. Since last December, it has been increasing its pile reaching alarming levels. The main reason China is doing this is to ensure it is not affected by the ongoing trade war. So far, it has been clear that this war will not come to an end anytime soon.
ChinaTrade Deal Unlikely Before 2020
Economics has been suggesting that China is unwilling to make a deal until the 2020 elections which could reveal a new president. Trump on his part is desperate for a deal going into the elections and China again wants to capitalize on this.
Beyond this, China seems unwilling to hold US dollars. Although the country has a substantial amount of dollars in reserve, they are looking to rapidly diversify. This is a growing trend across the world with most central banks finding the dollar risky. One such is Russia. Last year, the country bought more gold than at any time since it moved from the gold standard.
Is Bitcoin An Option For Central Banks?
Gold is the first, most used and accepted safe-haven asset, but while it has worked for years, there has been a newcomer, one that promises to be even better. Bitcoin and other digital assets have proven even better than gold. Over and above being a safe haven asset (store of value), it is also a medium of exchange and a unit of account.
With cryptocurrencies still a hot topic among lawmakers, it unlikely that a central bank will admit that it is accumulating Bitcoin. Analysts, however, insist that this is inevitable and expected to drive adoption and value.
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