China's Secret Gold Accumulation

Key Takeaways

• Goldman Sachs estimates China bought over 48 tonnes of gold in May, nearly 5 times the 10 tonnes officially reported
• The US has now completed nine consecutive nights of strikes on Iran, and oil remains the best gauge of Iran's counter-pressure

Goldman Sachs has just released an estimate that China's real gold purchases are about 5 times what they report. They see this as helping set a support level for gold in the face of Fed uncertainty.

According to Goldman Sachs, China acquired over 48 tonnes of gold in May alone through the London over-the-counter market. The official figure: 10 tonnes. It had previously been estimated by some that China was nearly doubling its official numbers, but this report reveals it could be more dramatic than anyone expected.

Central bank actions seem to keep going against their stated goals of controlling inflation. If they were able to, they would not need to keep buying so much gold.

On the geopolitical front, it looks like the Iran war may accelerate. We just reached the ninth night in a row of US strikes. The US has been increasing its aircraft numbers as well. Throughout the conflict, analysts have quickly dismissed Trump's claims of the conflict dissolving by pointing out military buildup in the region.

Iran has been heavily using missiles and drones to keep pressure on the US and its allies. The cheap and effective strategy is proving difficult to overcome, and the price of oil is the best metric of its success. The latest developments include the bombing of an Iranian nuclear facility under construction, and reports of a vessel being hit and on fire in the Strait of Hormuz.