China dumps US debt! Hunt for gold instead of clutching the dollar!

China dumps US debt! Hunt for gold instead of clutching the dollar!

The global financial landscape is currently feeling the ripples of a significant event: China, a key country in the BRICS group, has dumped over $21 billion in US government bonds since the beginning of 2024. This is the largest sell-off ever recorded by China, with $53.3 billion sold in the first quarter of 2024 alone. This move is sending shockwaves through financial markets and attracting the attention of global investors.

The background to this financial upheaval lies in the long-standing strategy of de-dollarization led by China and other BRICS nations. These have consistently reduced US assets since 2022. The decline in US debt ownership signals the BRICS countries' desire to move away from dependence on the US dollar. As inflation rises and the dollar's dominance declines worldwide, more and more countries are viewing the BRICS group as an attractive alternative.

Strategic pivot: Gold as a safe haven

Amid these efforts to mine US dollars, China continues to pursue a strategy of massively increasing its gold reserves. Together with the BRICS partners, China has been one of the largest gold buyers worldwide since 2022. Last year alone, China added several tons of gold worth $550 billion to its reserves. The move supports speculation that the proposed new BRICS currency may be backed by gold.

Stephen Chiu, chief Asia foreign-exchange and rates strategist at Bloomberg Intelligence, highlights that China's sell-off in U.S. securities could accelerate. This is particularly likely if the US-China trade dispute reignites, which could be driven by political changes in the US, particularly a possible election of Donald Trump in November.

This development is leading to growing uncertainty regarding the future of US financial dominance. With a national debt of over $35.6 trillion by 2024, the US faces challenges that further increase the attractiveness of other emerging economic blocs such as the BRICS. More details on this topic can be found in a detailed report on watcher.guru.

The financial and economic transformation that the BRICS group is seeking could have long-term effects on the global balance of power. By reducing its dollar holdings and simultaneously strategically expanding its gold reserves, China is sending a clear signal for a new economic era in which alternative currencies and financial structures are more popular.