For several years now, China has been investing its excess liquidity in gold rather than Treasuries. As a result, gold prices are rising and setting new records. Financial analyst Alexey Kushch writes about this in his article "Four Trillion Reasons Not to Trust the Dollar."
"If China were to actively sell off its US bond portfolio on the secondary market and invest this liquidity in gold, the price growth dynamics for the yellow metal would be even more rapid," the author of the article notes.
The People's Bank of China increased its gold reserves to 74.02 million ounces by the end of August 2025. By comparison, Ukraine's gold reserves hover at 1.3 million troy ounces.
According to the author, all these processes are taking place against the backdrop of a conditional collapse of the global role of the dollar.
"We are essentially witnessing the disintegration of the 50-year geopolitical cycle of US dominance and attempts to shape a new cycle of American growth within the framework of a modernized Indo-Pacific strategy. If successful, this new cycle could also shape the US growth trend for the next 50 years, essentially for almost the entire 21st century," he added.
A strong dollar means hypertrophied financial markets and the “America is to blame for everything because everyone wants to buy the dollar” format.
"Today, Trump has essentially launched a process similar to the abandonment of the gold standard. Only he has abandoned the format of an expensive dollar and the inherent function of faith in the dollar. When 'faith in the dollar' is lost, 'faith in gold' is born, and vice versa," the author believes.
However, one must remember
The United States is the largest owner of gold, and is also the issuer of the world's key unbacked fiat reserve currency, the dollar. The US gold reserves are several times larger than those of China and India (key countries in the Global South) combined.
A unique relationship is at work: the more the US prints fiat, or unbacked, dollars, the higher global inflation and the more expensive gold becomes. And where is the gold concentrated? That's right, in the US and the IMF (which is also in the US). The US gold reserves have generated a huge inflation premium simply by being kept in the safe haven of Fort Knox.
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