China's "quiet gold buying"... Aiming for the yuan as a reserve currency instead of the dollar.
Speculation that China is pursuing a "yuan reserve currency strategy" is gaining traction, with China continuing its large-scale gold purchases for 15 consecutive months. Analysts are also suggesting that if the "gold-yuan peg," a direct challenge to the US dollar's hegemony, becomes a reality, it could usher in the greatest shift in the international monetary order since World War II.
In a recent speech published in the Communist Party's theoretical journal "Seeking Truth," Chinese President Xi Jinping emphasized the need for a "strong currency" that is widely used in international trade and foreign exchange markets and possesses global reserve currency status. This indirectly signaled his intention to elevate the yuan (renminbi) to the new global reserve currency, replacing the US dollar, which has dominated international payments and raw materials trading since the 1940s.
China's gold reserves could be more than double official figures.
The People's Bank of China announced that its gold reserves would reach 2,306 tons by the end of 2025. This figure alone places China in sixth place, behind the United States, Germany, Italy, France, and Russia. However, gold market analysts and investment banks are raising doubts, saying, "The actual reserves could be at least two times, or even three times as much."
According to the World Gold Council (WGC), China has been purchasing gold for 14 consecutive months, continuing its record buying streak with additional purchases in January 2026. It is noteworthy that China has not stopped buying even as gold prices soared to record highs.
Precious metals analyst Jan Nieuwenhuijs (Money Metals Exchange) estimates that China actually holds around 5,411 tonnes of gold, more than double the official figure. He interprets this as China's "quiet accumulation" to avoid stimulating international gold prices.
He explained, “The secret purchases allow the People’s Bank of China to buy more gold at a lower price, achieving ‘bigger bang for the buck.’” Charles-Henri Monchat, chief investment officer at Syz Group, a Swiss financial group, also commented, “A large-scale sale of US Treasuries could trigger a market panic, but gold purchases are quiet and have a large cumulative effect.” He evaluated this strategy as “China’s strategy of gradually reducing dollar demand by converting its dollar holdings into gold and building a ‘currency buffer’ based on real assets.”
Author and gold and Bitcoin expert Dominic Frisby notes that China's gold hoarding is "the biggest story" in global finance, yet receives little attention. He estimates China's actual gold reserves at around 7,000 tonnes, arguing that "if China so chooses, it could declare that it holds three or even ten times the amount currently disclosed."
Frisbee believes that if the two countries are pushed into a direct conflict, China, like the United States, will use money (currency) as a 'weapon of war,' and that hidden gold could be a key tool for this.
80 Years After Bretton Woods… The Illusion of "Even Without Gold"
To understand China's "gold-yuan peg" plan, we first need to look back at how the US dollar became the world's reserve currency.
At the 1944 Bretton Woods Agreement, 44 Allied nations pegged their respective currencies to the US dollar and established a system where the dollar was exchanged for gold at $35 (approximately 58,000 won) per ounce. In effect, this created a "dollar = gold" structure, with each country using the dollar as a proxy for gold, and the United States settling international payments in gold.
However, with massive fiscal spending, including for the Vietnam War, the United States ended up printing more dollars than it had gold reserves. As demand for gold convertibility grew, then-President Richard Nixon unilaterally suspended the gold standard in 1971, thus ending the gold standard.
Nevertheless, the dollar's hegemony persisted, thanks to the size of the US economy, its military might, and the 8,133 tons of gold reserves allegedly stored in Fort Knox. Frisbee called this a "money illusion," saying, "People still believe there's gold somewhere in the dollar, so the currency can be used without any real assets."
He said, "If China were to one day come out and declare, 'We have five times more gold than we've ever disclosed,' then the Chinese currency would have a substantial backing comparable to that of the United States." Frisbee once estimated China's potential reserves at as high as 16,000 tonnes, but later revised that estimate to around 7,000 tonnes.
The question is how much gold China actually holds. Given the unreliability of official statistics, the market is trying to piece together a puzzle based on production, import, and transaction data.
"China's gold reserves at least double," production, imports, and trading volumes reveal.
According to the International Monetary Fund (IMF), China's GDP is projected to reach $20.7 trillion (approximately KRW 3.2 trillion) by 2026, while the United States' GDP is projected to reach $31.8 trillion (approximately KRW 4.62 trillion). Simply applying this economic scale ratio, China should reasonably hold around 5,300 tons of gold, approximately 65% of the US's gold reserves (8,133 tons). This figure is nearly double the figure reported by the Chinese government.
Analysts at Australia's ANZ Bank also estimate China's gold reserves at around 5,500 tons, placing it second only to the United States in terms of national gold reserves.
These estimates are not significantly different from production and import data. China has been the world's largest gold producer since 2007. According to Frisbee's blog, "The Flying Frisbee," China has produced 4,811 tonnes of gold since 2013. In 2024 alone, China mined 380 tonnes (10% of global production), more than half of which came from state-owned mines.
China is also one of the world's largest gold importers. In 2024, it imported approximately 1,225 tons of gold from Switzerland, Canada, Australia, and other countries. Considering the volume transiting through Hong Kong, the actual inflow could be even higher.
Another notable indicator is the volume of gold withdrawn from the Shanghai Gold Exchange (SGE). Since 2015, gold withdrawn from the SGE has averaged 1,800 tons annually. This serves as a proxy for gold demand within China, including the informal and private sectors. Frisbee estimates that a total of 23,250 tons of gold has flowed through the SGE since 2007, with 2,500 tons of undisclosed gold bullion hidden in London and approximately 4,000 tons stored in domestic mines and jewelry. Assuming that approximately 23% of this is owned by the People's Bank of China, he calculates the actual Chinese government holdings to be 7,294 tons.
Why aren't you releasing the 'real numbers' now?
Experts believe China's concealment of its gold holdings is a deliberate attempt to maintain a veil until a strategic plan is finalized. Nieuwenhuis interpreted this as "a declaration of independence for China rather than an attack on the United States," saying, "The People's Bank of China will not reveal its actual gold reserves until it determines that its economy and financial system have de-depended on the dollar."
China's foreign exchange reserves are estimated to be $3.4 trillion (approximately KRW 4,935 trillion) as of December 2025. A significant portion of them are still tied up in dollar assets, particularly US Treasury bonds. "One scenario is that once China is confident it no longer relies on the dollar, the People's Bank of China will disclose its real gold reserves," Nieuwenhuis said. "By that point, a structure will be in place to diversify trade and foreign exchange reserves between non-dollar currencies and gold."
Another scenario is a "crisis response card." He explained, "If confidence in the yuan is shaken sharply, the People's Bank of China could release its gold reserves to send the message that 'the yuan can be backed by gold at a 1:1 ratio.'" Just as the US dollar once dominated the global monetary order by promising gold convertibility, China could use gold as a means of restoring confidence.
Jeff Currie, chief strategy officer for Carlyle Energy Pathways, told the Financial Times that China's gold purchases are part of a "de-dollarization" strategy. However, given the prevailing view that a common BRICS-style gold standard currency is unlikely to be adopted in the short term, it seems more likely that China will pursue its own gold-yuan strategy for the time being.
"Get hold of Bitcoin, gold, and silver": A flood of warnings about hedge assets.
Amid this trend, voices are growing louder calling for the stockpiling of alternative assets, including gold and Bitcoin (BTC). Robert Kiyosaki, author of "Rich Dad, Poor Dad," and Frisbee have been publicly recommending the purchase of gold and Bitcoin for years. Kiyosaki recently added Ethereum (ETH) to his list of recommendations, expressing his distrust of the traditional monetary system.
Frisbee said, "I've consistently advocated for accumulating as much of these two forms of money as possible—gold and Bitcoin—which are not controlled by governments. I can't help but think both will play a crucial role in the future." He emphasized, "Gold is money created by nature, while Bitcoin is money created by massive computing power. Both are 'money' in and of themselves, and they don't depend on anyone's promises."
Gold prices have recently reached record highs and are continuing their upward trend. Experts see this as part of a "debasement trade." Amidst soaring government debt and geopolitical uncertainty, investors are fleeing to physical assets and limited-supply digital assets.
Bitcoin is currently trading at $68,423 (approximately 99.32 million won), down about a third from a year ago, but it's still up 16,500% since 2016. Despite its high volatility, it's still viewed as an "insurance" asset against fiat currency risk. Frisby reiterated, "That's why I recommend both gold and Bitcoin."
Cracks in the dollar hegemony… Will a yuan-gold-bitcoin triangle emerge?
China's gold-buying and dollar-de-dollarization strategies haven't yet demonstrated the potential to immediately disrupt the US dollar's status as the world's reserve currency. This is due to the substantial trust and network effects built since the Bretton Woods system. However, the overlapping efforts of expanding gold reserves, establishing non-dollar payment networks, and experimenting with the digital yuan are increasing the likelihood of a long-term transition to a "multipolar currency system."
Market analysts predict that gold, Bitcoin, and the yuan could form a "triangular axis" through which they each hedge against dollar risk in different ways. Gold would serve as a reserve asset for central banks and governments, Bitcoin as a non-governmental currency hedge for individuals and institutions, and the yuan as a substitute for the dollar in physical trade and energy and raw materials settlements.
Ultimately, the key question is when and how China will reveal its "real gold figures." This moment could signal a major shift in the global monetary order, and a single line from the People's Bank of China's gold statistics is emerging as a potential variable that could simultaneously shake up the global foreign exchange, bond, and cryptocurrency markets.
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🔎 Market Interpretation
China has been steadily purchasing gold for at least 14-15 months, gradually reducing its foreign exchange reserves (dollars and US Treasury bonds). Official statistics show approximately 2,306 tons, but various analyses suggest actual holdings are in the 5,000-7,000 ton range, and possibly even higher. This is interpreted as a "quiet deleveraging/dedollarization" strategy, with less market shock, rather than an overt sell-off of US Treasury bonds (treasury dumping). The combination of increased gold purchases and reduced dependence on the dollar could exert gentle but sustained downward pressure on the dollar's value and US financial hegemony in the long term.
💡 Strategy Points
1) Macro Asset Allocation: The trend of increasing gold holdings at the national level (China) also provides private investors with a rationale for strategically increasing their exposure to "non-government currencies/hard assets" like gold, silver, and Bitcoin. However, due to high short-term price volatility, accumulation and diversification are advantageous.
2) Currency hegemony risk management: While the yuan's potential to replace the global reserve currency in the short term is limited, it is necessary to consider diversifying the currencies of assets and income sources (dollar, euro, yuan, won, gold, bitcoin, etc.) to prepare for the possibility of a long-term shift from a "dollar unipolar system to a multipolar currency system."
3) Geopolitical and Emerging Market Observation Points: As BRICS and commodity exporters (Russia, the Middle East, South America, etc.) expand their gold purchases and non-dollar settlements (yuan, local currencies, swap lines), the dollar system will gradually weaken and structural upward factors for gold prices will strengthen. Key indicators include quarterly gold purchase data from central banks, China's gold imports and mining, and withdrawals from the Shanghai Gold Exchange (SGE).
4) Possibility of a "gold-backed currency": While it's unlikely China will immediately make the yuan fully convertible to gold, if trust in the yuan wavers, it has the potential to bolster confidence through "partial gold convertibility" or the disclosure of large-scale gold holdings. This could be a powerful strategic asset during times of heightened financial, diplomatic, and military conflict.
5) Investment Sentiment and Narratives: As historical narratives like Bretton Woods, the Nixon Shock, and the unaudited Fort Knox account resurface, suggesting that "money is ultimately a matter of trust," gold and Bitcoin are being re-evaluated as assets that hedge against "government trust risk." It's also important to keep in mind that reinforcing narratives can exacerbate price volatility beyond actual fundamentals.
📘 Glossary
Bretton Woods System: A postwar international monetary system agreed upon by 44 Allied nations in 1944. It pegged each country's currency to the US dollar, and the dollar was convertible into gold at $35 per ounce. It collapsed in 1971 with the Nixon Shock.
Global reserve currency: A currency held in large quantities by central banks and governments around the world as foreign exchange reserves and used as a standard for international trade and financial transactions. Currently, the US dollar holds the overwhelming majority.
Dedollarization: The trend of reducing dependence on the US dollar in international transactions, foreign exchange reserves, and debt issuance. This trend is spreading, particularly in emerging countries like China, Russia, and the BRICS.
PBoC (People's Bank of China): China's central bank, responsible for implementing monetary policy and managing foreign exchange and gold reserves. It is identified as the entity behind the "undisclosed gold purchases" mentioned earlier.
Shanghai Gold Exchange (SGE): A key hub for physical gold trading in China. As a gateway for informal, private, and institutional demand, withdrawal data serves as a crucial indicator of actual gold demand in China.
Gold convertibility/gold standard: A system in which currency issuance is limited by gold reserves and currency is redeemable for gold at a fixed rate upon request. Currently, no country in the world maintains a gold standard.
Hard Asset: An asset class that has real value, such as gold, silver, crude oil, and real estate, and is used as a means of protection against inflation and currency devaluation.
Non-sovereign Money: A form of "money" not issued or controlled by a specific country's central bank or government. Historically, this includes gold and silver, and more recently, Bitcoin and some cryptocurrencies.
💡 Frequently Asked Questions (FAQ)
Q.
If China accumulates this much gold, can the yuan really replace the dollar?
While significantly increasing gold reserves would help bolster trust in the yuan, it alone would be unlikely to replace the dollar immediately. To become a reserve currency, it requires not only military and economic power, but also capital market openness, rule of law and transparency, and political and diplomatic trust. However, if China continues to expand its influence through the "gold + yuan" combination in the long term, the dollar's absolute position will weaken, increasing the likelihood of a shift toward a multipolar currency system.
Q.
How can individual investors capitalize on China's recent gold rush?
The fact that central banks in many countries, including China, are steadily purchasing gold can be seen as a sign that gold remains an important store of value in the long term. For beginners, rather than pouring all of their assets into gold or Bitcoin, it's more realistic to diversify your investments. This approach can be achieved through gold ETFs, gold-related funds, or small purchases of physical assets. Given the volatility of Bitcoin and Ethereum, it's best to only use long-term reserve funds.
Q.
What would happen if China suddenly revealed its actual gold reserves?
If China were to disclose that it "actually holds thousands of tons more gold," it would boost confidence in the yuan in the short term and potentially lead to a further surge in gold prices. Simultaneously, questions about whether the dollar is truly reliable would grow, leading countries and investors to increasingly diversify their holdings into gold, Bitcoin, and other currencies. However, this shift is unlikely to occur overnight, but rather is likely to be a gradual process over years or even decades.
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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