Thailand Joins China in Driving Gold Bull Market
Thailand Joins China in Driving Gold Bull Market
How Thailand's transformation from price-sensitive seller to aggressive buyer signals a fundamental shift in global monetary power
Executive Summary
Shedding its long-standing price sensitivity, Thailand has emerged as a major gold buyer driving prices higher alongside China. This dramatic behavioral shift represents more than a tactical change—it signals a fundamental transformation in global gold market dynamics where pricing power is shifting eastward. The implications extend far beyond precious metals markets, potentially foreshadowing a complete restructuring of the international monetary order.
Present changes suggest that future Eastern trade may settle through interconnected local Central Bank Digital Currencies (CBDCs), with remaining imbalances transferred in physical gold rather than traditional dollar-denominated assets. This paradigm shift has profound implications for investors monitoring gold price movements and understanding the forces driving the current bull market.
Market Transformation Alert
Thailand's transformation from a century-long pattern of price-sensitive selling to aggressive buying during price rallies represents a seismic shift in Asian gold market behavior, aligning with China's post-2022 strategy of price control rather than price dampening.
Table of Contents
- Historical context: A century of price-sensitive Asian markets
- Thailand's dramatic behavioral shift since 2023
- Bank of Thailand's strategic gold accumulation
- Geopolitical tensions driving demand
- mBridge and the digital currency revolution
- Gold recycling theory and de-dollarization
- Saudi Arabia's participation: A game changer
- Future implications for the monetary order
Historical context: A century of price-sensitive Asian markets
Up until 2021, many Asian countries including Thailand maintained a consistent pattern of price-sensitive gold trading for nearly a century. They purchased gold when prices were steady or declining but swiftly became sellers when prices increased. During this extended period, gold pricing power remained concentrated in Western markets while Eastern participants served as volatility dampeners.
Traditional Asian Pattern
- Buy during price stability or declines
- Sell aggressively during price rallies
- Act as volatility dampeners for Western-controlled pricing
- Maintain price sensitivity over decades
Western Price Control
- London and New York dominated price discovery
- Asian markets reacted to Western price signals
- East-West gold flows followed predictable patterns
- Volatility management through Eastern selling
Market Equilibrium
- Stable feedback loops between regions
- Predictable supply-demand dynamics
- Limited geopolitical influence on gold flows
- Dollar-centric settlement systems
The West-East Ebb and Flow
This historical pattern created what analysts called the "West-East ebb and flow of gold"—a systematic movement where Western demand drove prices higher, triggering Eastern selling that moderated price increases. This mechanism provided natural price stabilization and predictable market behavior for decades.
Historical Context
The Ukraine war's outbreak in 2022 fundamentally disrupted this century-old pattern. Sanctions on Russia and the freezing of $300 billion in Russian reserves triggered massive reassessment of traditional reserve asset safety across Asia, setting the stage for the dramatic changes we observe today.
Thailand's dramatic behavioral shift since 2023
International trade statistics reveal that Thailand followed China's lead starting in November 2023. Instead of the traditional pattern of steady accumulation during price stability and selling into rallies, Thailand became a solid net importer while the gold price surged 20%—from ฿72,100 Thai baht per ounce in October 2023 to ฿85,700 in April 2024 (equivalent to $2,000 to $2,300).
| Period | Price Movement | Traditional Thai Behavior | New Thai Behavior (2023-2024) |
|---|---|---|---|
| Price Stability | Flat or declining | Steady accumulation | Continued accumulation |
| Price Rallies | Rising 10-20% | Aggressive selling | Aggressive buying |
| Volatility Periods | High fluctuation | Net selling to dampen spikes | Net buying despite volatility |
Pre-2023 Pattern
Thailand consistently exported gold during price rallies, following the traditional Asian model of selling strength and buying weakness. This behavior supported Western price control mechanisms and provided natural market stabilization.
Post-2023 Transformation
Thailand became a net importer concurrent with price increases, abandoning century-old patterns. This shift aligns with China's post-2022 strategy of driving rather than dampening gold price momentum.
Market Impact
Thailand's behavioral change removes a significant source of natural selling pressure during rallies, contributing to more sustained price advances and reduced Western control over gold market dynamics.
Technical Analysis
Chart analysis reveals that during previous decades, Thai gold exports (red circles) consistently coincided with price increases. The green indicators show Thailand's transformation into a net importer during price advances—a complete reversal of historical patterns that has significant implications for gold price trajectories.
Bank of Thailand's strategic gold accumulation
The Bank of Thailand (BOT) has implemented an aggressive gold accumulation strategy that provides both policy framework and popular encouragement for the country's shift toward gold buying. Since the Great Financial Crisis, the BOT has nearly tripled its gold reserves from 84 tonnes to 236 tonnes, signaling a fundamental shift in reserve management philosophy.
Official BOT Position on Gold
In late October 2023, BOT Deputy Governor of Monetary Stability, Alisara Mahasandana, articulated the central bank's strategic rationale: "Gold is a relative safe haven in an era of high inflation and growing geopolitical risks. We need to create a resilient portfolio against all shocks and changes around us... [Gold] is a hedging tool during high inflation and political uncertainty as well as geopolitical events. It's good for risk diversification."
Reserve Diversification Strategy
- Gold reserves increased from 84 to 236 tonnes
- Nearly 300% increase since Global Financial Crisis
- Systematic diversification away from traditional assets
- Focus on geopolitical risk management
Policy Framework
- Gold positioned as inflation hedge
- Political uncertainty mitigation tool
- Portfolio resilience against external shocks
- Risk diversification mandate
Market Leadership
- Central bank buying encourages private sector
- Cultural alignment with traditional gold saving
- Institutional validation of gold strategy
- Public-private sector coordination
Traditional Asset Risk Assessment
The BOT explicitly noted that bonds from countries previously perceived as safe bets now face uncertain outlooks. This assessment directly challenges the traditional Western-dominated reserve asset hierarchy and provides institutional justification for significant portfolio shifts toward gold accumulation.
Geopolitical tensions driving demand
The consensus among market observers is that elevated Thai gold demand stems primarily from geopolitical tensions. Beyond Thailand's long history of gold savings culture, current buying is actively stimulated by central bank leadership and institutional policy shifts that validate gold as a strategic asset during uncertain times.
Traditional Cultural Foundation
Thailand maintains a deep cultural tradition of gold savings, providing the foundation for increased buying when institutional signals align with popular sentiment about economic uncertainty and geopolitical risks.
Institutional Leadership
Central bank accumulation provides official validation and policy framework that encourages private sector gold buying, creating coordinated demand across institutional and retail segments.
Pension Fund Strategy
In April 2024, the Thai Government Pension Fund announced plans to "adjust investment proportions by reducing assets that could be affected by war and increasing investments in alternative assets such as gold and oil."
Systematic Risk Management
Thailand's approach represents sophisticated risk management in response to multiple simultaneous threats: currency debasement risks, geopolitical instability, traditional safe asset uncertainty, and the potential weaponization of reserve currencies. This comprehensive assessment drives coordinated institutional and popular response toward precious metals accumulation.
mBridge and the digital currency revolution
Thailand's behavioral change may connect to mBridge, an international payments project coordinated by the BIS Innovation Hub in Hong Kong. The earliest participants developing mBridge are Thailand, the UAE, China, and Hong Kong—creating a digital infrastructure that enables cross-border payments without dollars while requiring alternative settlement mechanisms for trade imbalances.
| mBridge Component | Function | Gold Market Impact |
|---|---|---|
| Multi-CBDC Platform | Cross-border payments without dollars | Reduces dollar demand, increases gold utility |
| Distributed Ledger Technology | Instant settlement capabilities | Enables real-time gold transfer verification |
| Chinese Technical Control | Sanction-resistant infrastructure | Independent gold pricing mechanisms |
| Trade Imbalance Settlement | Non-dollar surplus management | Gold as reserve asset alternative |
Technical Infrastructure
mBridge utilizes an Ethereum-compatible DLT network developed by China's Digital Currency Research Institute. Chinese control over the system's backbone makes it resistant to Western sanctions and enables independent monetary operations.
Operational Benefits
The platform enables instant cross-border payments and settlement, significantly improving efficiency over current systems while eliminating dollar requirements for participating countries' bilateral trade.
Political Advantages
Many Asian countries favor non-dollar trading for political reasons, making mBridge an attractive alternative to traditional Western-controlled payment systems and dollar-denominated settlements.
Timeline Significance
On May 21, 2024, Thailand and China discussed "strengthening banking and financial cooperation, including the promotion of local currency usage as well as cross-border payment and settlement." This occurred days before mBridge reached Minimum Viable Product stage on June 5, 2024, suggesting coordinated implementation of alternative monetary infrastructure.
Gold recycling theory and de-dollarization
The Gold Recycling theory suggests that nations interested in reducing dollar dependence store trade surpluses in gold rather than US Treasuries. Combined with mBridge capabilities, this approach enables comprehensive de-dollarization: non-dollar trading through digital currencies with surplus storage in non-dollar assets.
Structural De-Dollarization Framework
mBridge participants inevitably face trade imbalances with each other, which prove difficult to settle in respective currencies due to illiquid financial markets and capital controls. The Gold Recycling theory provides a solution: countries store surpluses in physical gold rather than dollar-denominated assets, creating a complete alternative to the current dollar-centric system.
Traditional Dollar System
- Trade conducted in dollars
- Surpluses stored in US Treasuries
- Settlement through Western banks
- Exposure to sanctions and freezing
mBridge + Gold Alternative
- Trade in local digital currencies
- Surpluses stored in physical gold
- Settlement through independent systems
- Sanction-resistant value storage
Implementation Benefits
- Reduced geopolitical vulnerability
- Independent monetary policy
- Inflation-resistant value storage
- Enhanced financial sovereignty
Market Implications
This framework explains why multiple Asian countries are simultaneously increasing gold purchases while developing alternative payment systems. The combination creates comprehensive infrastructure for reduced dollar dependence while maintaining value storage security through gold accumulation.
Saudi Arabia's participation: A game changer
Saudi Arabia's announcement to join mBridge as a full participant on June 5, 2024, represents a potential paradigm shift. The country that historically played a crucial role in the petrodollar system is now participating in infrastructure designed to reduce dollar dependence—while simultaneously engaging in covert gold accumulation.
Historical Significance
- Architect of petrodollar recycling system
- Cornerstone of dollar-based energy trade
- Traditional US financial system ally
- Massive dollar reserve accumulator
Strategic Pivot
- Full mBridge participation announced
- Covert gold buying operations
- Diversification away from dollar assets
- Alignment with China and Thailand
Market Impact
- Validates alternative monetary systems
- Adds massive buying power to gold demand
- Signals broader Middle East participation
- Challenges dollar dominance foundations
Open Secret: Saudi Gold Buying
Within the gold industry, it's an open secret that Saudi Arabia's central bank is covertly buying gold. Combined with its mBridge participation alongside China and Thailand—both obvious aggressive gold buyers—this creates a powerful coalition of countries with massive financial resources implementing coordinated alternative monetary infrastructure.
Systemic Implications
Saudi participation in both mBridge and covert gold accumulation represents more than portfolio diversification—it signals potential abandonment of the petrodollar system that has underpinned global monetary arrangements since the 1970s. This shift could accelerate de-dollarization trends and increase structural demand for gold as an alternative reserve asset.
Future implications for the monetary order
The convergence of Thailand's behavioral shift, mBridge development, and coordinated gold accumulation by key participants suggests we may be witnessing the early stages of a fundamental transformation in the international monetary order. However, significant gaps remain in understanding how this new system will function in practice.
Near-Term Developments
mBridge now includes 5 full participants and over 26 observing central banks. Russia, while not yet a participant, has indicated plans for CBDC cross-border payments within 18 months, potentially expanding the system further.
Outstanding Questions
Critical unknowns include liquidity arrangements in currency pairs, potential adoption of renminbi as common trade currency, settlement mechanisms for complex multi-party transactions, and integration with existing financial infrastructure.
Gold Market Impact
Sustained institutional demand from countries implementing alternative monetary systems provides structural support for gold prices, independent of traditional Western economic cycles and monetary policy.
Investment Implications
Thailand's transformation from century-old price sensitivity to aggressive buying during rallies represents more than tactical change—it reflects institutional recognition that gold serves as essential infrastructure for monetary independence. This shift, replicated across multiple countries, suggests sustained structural demand that supports long-term bullish scenarios for gold investors.
Timeline Considerations
Russian officials suggest common CBDC cross-border payment practice within five years. This timeline provides a framework for monitoring the evolution from experimental systems to operational alternatives to dollar-based international trade, with gold likely playing an increasingly important settlement and reserve role throughout this transition.
Monitoring Framework
Investors should track multiple indicators: continued Asian central bank gold buying, mBridge participant expansion, bilateral currency agreement announcements, and traditional safe asset allocation shifts. These developments collectively signal progress toward the new monetary order where gold plays a central role rather than serving as a mere portfolio hedge.
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. Geopolitical developments and monetary system changes create additional uncertainties. Always consult with qualified financial advisors before making investment decisions.