Lots of people are posting about this—China's central bank has been increasing its gold reserves for 23 consecutive months. I got curious and did some research. Pretty interesting stuff, so I thought I'd share it with everyone. First off, some people are worried about whether buying at such high levels might lead to losses. They’re not worried. The central bank uses foreign exchange reserves to buy gold. For a total reserve of $3.4 trillion, the gold purchased this month (~$3 billion) only accounts for 0.1%. Plus, you can observe that they usually buy more when prices drop and less when prices rise. Second, does this mean war is coming? Overall, this isn’t strong evidence to suggest that. At most, it shows a reduced reliance on the U.S. dollar. Money that might’ve been used to buy U.S. Treasury bonds in the past is now being used to buy gold instead. With all this gold, where does China rank globally? According to data disclosed by the World Gold Council, China’s gold reserves now rank fifth globally, just slightly ahead of Russia. PS: But Russia’s economy is in such bad shape that they’ve already started selling off gold bit by bit. The top 4 are the U.S., Germany, Italy, and France. Wait, what? Italy ranks third globally in gold reserves? Why? They started stockpiling early. By the late 19th century, they were already hoarding gold. During the Bretton Woods system era, they used trade surpluses to exchange for a lot of gold from the U.S. Treasury. They barely spent any of it and have kept it until now. Germany (especially West Germany) and France did something similar. What about the U.K.? The U.K. sold too early and now ranks only 19th globally. Plus, they sold at relatively low prices back then, making it hard to buy back later. PS: I even have this weird feeling that hoarding gold is kind of similar to hoarding Bitcoin. The strategy is basically the same: buy more when prices drop, chase less when prices rise. If you buy enough during a “historical window,” you’re set. But if you miss the chance or sell too early, it’s really hard to catch up later.