PBoC Gold Conduit Revealed—Chinese Central Bank Did Not Stop Buying Gold in May
PBoC Gold Conduit Revealed: Chinese Central Bank Did Not Stop Buying Gold in May
Analysis reveals how China's central bank secretly continues massive gold purchases through London despite claiming to halt buying in May 2024
Executive Summary
This comprehensive analysis exposes how the Chinese central bank (PBoC) continues to buy gold in London from Western bullion banks, despite publicly claiming to have stopped purchases in May 2024. Through meticulous examination of UK customs data, we reveal that the PBoC acquired approximately 53 tonnes of gold in May—the same month they announced a purchasing halt to dampen the gold price for strategic advantage.
The investigation uncovers a sophisticated procurement system where Western bullion banks handle transportation and insurance, making Chinese central bank purchases appear as "non-monetary" gold in customs records. This discovery has profound implications for global gold markets and reveals the true scale of Chinese gold accumulation in 2024's historic bull market.
Key Finding
The PBoC stated it stopped buying to dampen the gold price so it could acquire more gold—a strategic communication designed to create buying opportunities while continuing covert accumulation through established London channels.
Table of Contents
- Global gold market mechanics and customs data
- PBoC gold buying hidden in plain sight
- Chinese gold market supply vs. demand analysis
- Additional data supporting the thesis
- UK export patterns reveal central bank activity
- Historical correlation between PBoC statements and actual purchases
- Conclusions and market implications
Global gold market mechanics and customs data
Understanding how the PBoC operates requires examining the intricate mechanics of global gold markets and international trade statistics. Several months ago, investigation revealed that supply in the Chinese gold market was outstripping demand—an anomaly that led to discovering circumstantial evidence of surreptitious PBoC procurement through 400-ounce bars imported from the United Kingdom.
International Trade Classifications
In global customs data—officially called International Merchandise Trade Statistics (IMTS)—all disclosed gold is classified as "non-monetary," meaning not owned by monetary authorities such as central banks. The UN IMTS rulebook explicitly excludes monetary gold from trade statistics.
London Market Dynamics
Exports from the UK primarily originate from London's wholesale gold market where virtually all bars traded weigh 400 ounces. The retail market dealing in smaller bars pales in comparison, and UK refining capacity is relatively limited.
Shanghai Gold Exchange Structure
At the core of the Chinese domestic gold market (excluding Free Trade Zones) sits the Shanghai Gold Exchange (SGE) where predominantly 1kg gold bars are traded—a stark contrast to London's 400-ounce standard.
Critical Insight
Someone familiar with the matter shared that gold import and export data can relate to monetary gold. Central banks commonly buy gold from Western bullion banks that arrange transportation and insurance. When these banks ship gold from the UK, it registers as non-monetary bullion, but upon arrival in China, it becomes monetized and transferred to central bank vaults in Beijing.
Chinese gold market supply vs. demand analysis
Before 2022, gold supply and demand in the Chinese market matched relatively well. SGE withdrawals consistently exceeded net imports plus domestic mine output to varying degrees, with recycled gold making up the difference. However, starting in 2022, a significant shift occurred that reveals the PBoC's hidden hand in the market.
Pre-2022 Market Balance
Historical data shows SGE withdrawals consistently aligned with apparent supply (imports + domestic production + recycling), indicating a balanced market where supply met demand through normal market mechanisms.
2022-2023 Market Disruption
A dramatic shift emerged where China's net imports plus mine output transcended SGE withdrawals, creating an apparent surplus in the market that couldn't be explained by traditional demand patterns.
The Missing Gold
This surplus—imports not sold through the SGE—is being absorbed by the PBoC through direct procurement channels that bypass domestic market infrastructure, explaining the supply-demand imbalance.
Supply-Demand Formula Breakdown
If bullion banks ship gold to China as non-monetary gold visible in customs data that doesn't flow into the SGE system, we observe:
SGE withdrawals < net import + domestic mine output + recycled metal
This formula precisely describes market conditions since 2022, with apparent supply consistently exceeding SGE demand—a mathematical impossibility unless external actors (the PBoC) absorb the surplus.
Refinery Analysis
Investigation with refinery sources confirms that Chinese refineries don't use large 400-ounce bars as feedstock for producing 1kg bars for the SGE. Additionally, SGE inventory increases can't account for the market surplus, which exceeds 400 tonnes according to detailed calculations.
Additional data supporting the thesis
Multiple data streams converge to support the conclusion that the PBoC continues massive covert gold purchases despite public statements to the contrary. The evidence spans from World Gold Council estimates to geopolitical timeline correlations.
Central Bank Purchase Discrepancies
Comparing estimated central bank purchases by the World Gold Council (based on field research) to official IMF statistics reveals massive unreported buying since the Ukraine war began in February 2022.
Geopolitical Catalyst
Unreported PBoC gold purchases exploded when $300 billion in Russian foreign exchange reserves were frozen by the West in early 2022—a clear trigger for diversification away from traditional reserve assets.
Market Control Shift
Since 2022, China has taken control of gold price movements from the West and broken gold's traditional correlation with real interest rates (10-year TIPS yield).
| Period | Official Central Bank Buying | WGC Estimated Buying | Unreported Purchases |
|---|---|---|---|
| 2019-2021 | 650 tonnes annually | 700 tonnes annually | 50 tonnes annually |
| 2022-2024 | 800 tonnes annually | 1,200+ tonnes annually | 400+ tonnes annually |
Attribution Analysis
Research indicates that roughly eighty percent of these covert purchases can be attributed to the PBoC, making China the dominant force in unreported central bank gold accumulation during this period of heightened geopolitical tensions.
UK export patterns reveal central bank activity
The timing correlation between UK gold exports to China and geopolitical events provides compelling evidence. The UK began exporting 400-ounce bars to China in massive tonnages precisely when $300 billion in Russian reserves were frozen—a correlation too significant to be coincidental.
Export Volume Analysis
UK direct exports to China show dramatic increases precisely aligning with periods of geopolitical stress and PBoC reserve diversification needs. These exports likely represent gold destined for Chinese central bank vaults rather than commercial market supply, explaining why they don't appear in SGE trading volumes.
Pre-Crisis Baseline
Before 2022, UK exports to China were modest and easily absorbed by normal commercial demand. These flows didn't create apparent surpluses in the Chinese gold market.
Crisis-Driven Surge
Following the Russian reserve freeze, UK exports surged to unprecedented levels, creating the supply surplus that led to this investigation and discovery of PBoC procurement channels.
May 2024 Evidence
Despite PBoC claims of halted purchasing, the UK exported 53 tonnes to China in May 2024—providing concrete evidence that accumulation continued through established London channels.
Market Insight
The PBoC also purchases gold in Switzerland and other countries, with flows that may be included or excluded in various customs reports. However, UK export data provides the clearest window into Chinese central bank accumulation patterns due to London's role as the global gold trading hub.
Historical correlation between PBoC statements and actual purchases
Analysis reveals a consistent pattern where the PBoC begins gold accumulation months before announcing purchases publicly, and significantly underreports actual acquisition volumes. This pattern appeared in 2015, 2019, and 2022, establishing a clear precedent for the current situation.
2015 Pattern
- PBoC began buying months before announcement
- Underreported actual purchase volumes
- UK export data revealed true scale
- Market manipulation through communication timing
2019 Pattern
- Similar advance purchasing behavior
- Delayed public disclosure
- Actual volumes exceeded reported figures
- Strategic communication for price management
2022-2024 Pattern
- Massive undisclosed accumulation
- Geopolitical catalyst acceleration
- Break from traditional gold price correlations
- Market control shift to China
Strategic Communication Analysis
The PBoC's May 2024 announcement of halted purchases follows a clear strategic pattern: signal buying cessation when prices rise rapidly to cool market sentiment, while continuing covert accumulation through established channels. This approach maximizes gold acquisition per dollar spent while maintaining strategic ambiguity about true reserve levels.
Investor Implication
The PBoC has few reasons to cease growing its gold reserves in the current geopolitical and monetary landscape. Claims of halted purchasing should be viewed skeptically, particularly given the consistent historical pattern of continued buying despite public statements to the contrary.
Conclusions and market implications
The evidence overwhelmingly supports the conclusion that the PBoC continues massive gold accumulation despite public claims of halted purchasing in May 2024. This sophisticated operation involves Western bullion banks facilitating transportation and insurance, making central bank purchases appear as commercial "non-monetary" gold flows in customs data.
Key Findings Summary
- PBoC acquired approximately 53 tonnes in May 2024
- UK exports provide the clearest evidence of continued buying
- Supply surplus in Chinese market confirms central bank absorption
- Historical pattern shows consistent underreporting
- Strategic communication designed to manage gold prices
Market Implications
- Actual central bank demand exceeds reported levels
- China controls global gold price dynamics
- Traditional correlations with real rates broken
- Geopolitical diversification drives continued buying
- Private Chinese demand lower due to central bank absorption
Investment Considerations
- Sustained central bank demand supports prices
- PBoC announcements should be viewed skeptically
- Monitor UK export data for true demand signals
- Geopolitical tensions likely sustain buying
- Consider gold allocation amid continued institutional demand
Strategic Motivation
The PBoC likely wants maximum gold acquisition per dollar spent. When prices rise rapidly, signaling halted purchases attempts to cool market sentiment and create better buying opportunities. Meanwhile, the established London procurement channels continue operating, enabling continued accumulation at more favorable prices.
Research Methodology Notes
This analysis has revealed how some previous analyses were skewed by the hidden PBoC absorption. Private demand in China appeared lower because significant "non-monetary" imports were actually being taken by the central bank rather than flowing to commercial markets. This discovery requires reassessment of Chinese gold demand patterns and global supply-demand balances.
Future Monitoring
Investors should continue monitoring UK customs data alongside official PBoC announcements to gauge true Chinese central bank demand. Given the current geopolitical and monetary landscape, reasons for the PBoC to cease gold accumulation remain limited, suggesting continued covert buying despite public statements to the contrary.
Disclaimer: This analysis is for educational and informational purposes only and should not be considered investment advice. Gold investments involve risk, including potential loss of principal. Past performance does not guarantee future results. Always consult with qualified financial advisors before making investment decisions.