China National Gold (SH:600916) Sou Hu Cai Jing·2025-10-28 11:04Core Viewpoint - The surge in gold prices to unprecedented levels signals a global financial trust crisis, marking the end of an old era and the birth of a new monetary landscape, with China reshaping the global currency trust logic based on gold [1][18]. Group 1: Dollar's Declining Trust - The dollar's status as the world's safest asset has been undermined, particularly after the U.S. froze $300 billion of Russian foreign reserves, revealing the dollar as a political tool rather than a universal deposit [3][5]. - By 2025, the repercussions of this trust crisis are expected to be significant, with the U.S. fiscal deficit surpassing $1 trillion in just five months and the dollar index dropping nearly 10% within the year [3][5]. Group 2: Central Banks' Response - In response to the declining trust in the dollar, global central banks net purchased 1,136 tons of gold in 2024, the second-highest level in history, with China, Poland, and Turkey accounting for over half of the purchases in the first quarter of 2025 [5][10]. - China's official gold reserves have reached an impressive 73.9 million ounces, reflecting a strategic move beyond mere accumulation to enhancing the international status of the renminbi [5][10]. Group 3: Shanghai Gold Exchange (SGE) Developments - The SGE has established a "gold corridor" that allows gold bars produced in China to be directly traded on the international board, significantly reducing transaction costs [7][10]. - By 2025, the business scale of this "gold corridor" is expected to exceed 10 billion yuan, enabling Southeast Asian countries to purchase Chinese goods directly with renminbi in exchange for physical gold [8][10]. Group 4: New Monetary Pathways - The SGE's international version has already reached 3.67 trillion yuan in transaction volume in the first ten months of 2024, covering 16 countries and facilitating a new path to bypass dollar settlements [10][12]. - The BRICS nations are exploring the possibility of using gold as collateral for loans in renminbi for infrastructure projects in Africa, aiming to escape dollar debt and high-interest burdens [10][12]. Group 5: Gold's Financial Recognition - In July 2025, gold will be officially recognized as a level one asset under Basel III, allowing it to be fully counted in risk asset calculations, thus enhancing its status in the financial system [12][14]. - The World Gold Council is promoting the concept of "digital gold," which utilizes blockchain technology to create unique records for each gold bar, transforming gold into an active asset that can be used for collateral financing [12][14]. Group 6: Global Monetary Landscape - The global monetary system is increasingly divided into two camps: the Eastern camp led by China and BRICS, focusing on a gold-backed currency, and the Western camp led by the U.S., emphasizing digital assets [14][18]. - Currently, central banks allocate 20% of their total reserves to gold, with analysts suggesting this should increase to 30%, representing a potential demand for gold worth $2 trillion [16][18]. Group 7: Investment Opportunities - For ordinary investors, incorporating a certain percentage of gold ETFs into asset allocation is advisable, while also considering copper and emerging digital assets like Bitcoin for short-term trading opportunities [16][18]. - Renminbi-denominated assets, including Chinese government bonds and blue-chip stocks, are positioned to become a new "safe haven" for global capital during turbulent times [16][18].