China Adds Almost 100 Tons of Gold to Reserves, Continues Ignoring Bitcoin

The People’s Bank of China has been secretly stocking up on gold. Its total reserves have slowly been ticking upward, adding 5.91 tons of gold to its reserves in August alone. In the 8 months preceding August, a stunning 94 tons has been purchased by the country according to recent reports. Related: Looking to buy and sell Bitcoin? Check out our guide on the best cryptocurrency exchanges for trading Bitcoins.

China’s Gold Buying Spree

China’s interest in expanding its gold reserves may be one of the major reasons bullion is nearing its six-year high in price. However, it is not alone. Russia has been doing much of the same with similar urgency. In fact, across the board, it was reported in 2018 that gold purchases by central banks were at a 50-year high. According to Australia & New Zealand Banking Group Ltd., this ‘buying spree’ will continue for some time. As John Sharma, an economist at the National Australia Bank Ltd., told Bloomberg recently, “With increasing political and economic uncertainty prevailing, gold provides an ideal hedge, and will, therefore, be sought after by central banks globally.” The accumulation, therefore, is directly tied to the geopolitical uncertainties present today.

Bitcoin Enters the Fray

Although gold is seen as the ‘perfect’ hedge against economic uncertainty, Bitcoin has, in fact, outperformed it as a hedge. This past summer, the leading cryptocurrency was found to be more responsive to geopolitical trends like the escalating U.S.-China trade war.  Being an invention birthed of the internet, it seems that Bitcoin is becoming more aligned with the pulse of global markets as of late. Yet, despite being uber-responsive, Bitcoin still lacks the trust that gold possesses, and has captured only a tiny fraction of gold’s market capitalization. Two weeks ago, gold added $250B to its market valuation in just 24H which is more than Bitcoin’s entire market capitalization. So, will we ever see nations like China or Russia stock Bitcoin in large amounts? Perhaps not in the near future, but they’ve both already considered the possibility. Bitcoin remains too young of an asset, however, it’s still worth noting that these central banks may be diversifying into cryptocurrencies in secret. Do you believe the current ‘gold rush’ by central banks will continue for the next two years? Let us know your thoughts below in the comments.  Buy and trade cryptocurrencies with a 100x multiplier on our partner exchange, StormGain.