Authored by Caden Pearsen via The Epoch Times,

Sen. Tom Cotton (R-Ark.) on Wednesday pressed the U.S. Secret Service for details regarding its ongoing investigation into the discovery of cocaine at the White House.

The Secret Service confirmed that cocaine was found in the West Wing of the White House on Sunday, believed to have been brought in by someone who works there or had authorization to be there. This development has prompted Republican lawmakers to raise broader questions about security and drug use at the presidential residence.

In a letter to Secret Service Director Kimberly Cheatle, Mr. Cotton urged the agency to promptly provide information regarding the specific location within the White House complex where the substance was found.

“The American people deserve to know whether illicit drugs were found in an area where confidential information is exchanged,” wrote Mr. Cotton (pdf).

The letter posed a series of questions to Ms. Cheatle, seeking clarification on the security of the complex and requesting the Secret Service’s plan to address any identified security flaws.

“If the White House complex is not secure, Congress needs to know the details, as well as your plan to correct any security flaws,” wrote Mr. Cotton, who is a member of the Subcommittee on Criminal Justice and Counterterrorism.

He also requested a “complete list” of individuals who can enter the White House without undergoing full security screenings as well as those who are subject to lesser security screening requirements than those entering the West Wing, along with “the reasons such individuals are not subject to complete screening.”

Mr. Cotton also asked for data on the Secret Service’s use of K-9 screenings and information about audits conducted on their security procedures.

The letter additionally inquired about the frequency of encounters with illegal drugs at the White House complex over the past five years. Citing a section of the U.S. Code, Mr. Cotton asked whether the Secret Service would exercise its authority to make warrantless arrests for offenses committed in their presence or for any felony under federal law if the individual responsible for bringing cocaine into the White House is identified.

The Republican senator gave the Secret Service director until 5 p.m. on July 14 to respond. He also requested a briefing on the matter and the provision of classified or law enforcement-sensitive answers to his questions.

White House Tight Lipped

White House press secretary Karine Jean-Pierre avoided providing specifics when asked several times about the location where the cocaine was found and the potential consequences that might emerge from the Secret Service’s investigation.

She informed reporters on Wednesday that the substance was discovered in a “heavily traveled” area of the West Wing, which is routinely accessed by visitors and staff.

White House Press Secretary Karine Jean-Pierre speaks during a press briefing at the White House in Washington on July 5, 2023. (Madalina Vasiliu/The Epoch Times)

She expressed confidence in the Secret Service’s investigation but would not be drawn to provide further details, repeatedly saying the probe is “under their purview.”

Anthony Guglielmi, chief of communications for the Secret Service, told The Epoch Times on Wednesday they are going to do their best “to identify who may have brought it in.” He said the illicit substance was found in an area closed to the public but accessible by staff, the media, guests, and others with business in the West Wing during the security screening process.

“There’s a multitude of individuals who come through this area. It’s an open area for individuals who are authorized to be in the West Wing,” Mr. Guglielmi said.

Responding to the news, former President Donald Trump, a candidate for the 2024 presidential election, took to Truth Social to express skepticism.

“Does anybody really believe that the COCAINE found in the West Wing of the White House, very close to the Oval Office, is for the use of anyone other than Hunter and Joe Biden,” Mr. Trump said on Wednesday.

Ms. Jean-Pierre noted that the president and his family were at Camp David over the weekend.

“They left on Friday and returned just yesterday,” she said at Wednesday’s press briefing.

Former Vice President Mike Pence, another 2024 candidate, expressed disbelief during an interview on Hugh Hewitt’s nationally syndicated radio show on Wednesday. Pence said it would be “wall to wall” media coverage if cocaine had been found in the West Wing during the Trump–Pence administration.

“I mean, if the news accounts I read are right, this was in, this was not in the White House complex, right?” Pence said. “This was in the residence itself, if I understand,” he added. “It was in the library in the White House.”

“We ought to know in real-time who brought and left cocaine on a table in the residence in the White House, but I’m not holding my breath,” he added.

The White House was briefly evacuated on Sunday night after the Secret Service found the illicit substance, which at the time it described only as an “unknown item.” The discovery of the mysterious substance in the West Wing prompted the dispatch of a hazmat team as well as the D.C. Fire Department and EMS.

In the latest eye-rolling example of government incompetence, the US Navy’s Pacific Fleet tweeted a Fourth of July graphic with the intent of honoring the American military — but accidentally saluted Russia’s instead. 

The since-deleted tweet featured the silhouettes of five military aircraft flying in formation over a surface ship: 

However, eagle-eyed US service members and vets promptly realized the image featured Russian fighters and a Russian destroyer.  

The graphic also depicted soldiers bowing in front of a fallen comrade. Here, the Pentagon’s diversity-hire graphic designer got lucky and diverted from the heavy Russian theme, properly using the silhouette of an M-16 and not an AK-47. 

Pacific Fleet didn’t respond to questions about the sloppy execution from Stars and Stripes. Then again, the inquiry was made on July 4th, so it’s likely the fleet’s public affairs officers were off somewhere together having a Bud Light blowout.  

Blake Herzinger, a US Navy Reserve Lieutenant Commander and former active-duty intelligence officer, was among the earliest to spot to spot the snafu. Herzinger, who’s been dabbling on a Substack newsletter about the Navy called “Sailor Take Warning,” summarized the mess by tweeting: “US Pacific Fleet Don’t Post Russian Ships and Aircraft on Independence Day Challenge 2023: Failed.” 

In the ensuing reply thread, Herzinger credited a Twitter user — whose bio says he’s a retired Indian Navy commodore — as having identified the silhouetted ship as a Kashin-class destroyer: 

Recce prize goes to @vgmenon99! Kashin-class DDG, no longer in service in Russia but several still in the Indian Navy’s stable. pic.twitter.com/2cIOFSiXil

— Blake Herzinger (@BDHerzinger) July 4, 2023

Others identified the jets as SU-27 Flanker fighters. 

@USPacificFleet switched to Russian aircraft and ships!

Transgender designers prepared really great holiday card.

– In the center: Kashin-class Destroyer, project 61M.
– Above: the Su-27 Flanker-class fighters.

Congratulations to American partners! pic.twitter.com/TJL1NgijpT

— Ukraine&Syria frontlines (@SyriaWarReports) July 4, 2023

The screw-up comes as the Navy recruiting operation is in full-on crisis mode. With the branch forecasting that it will fall 16% short of its fiscal 2023 recruiting goal, the head of Navy Recruiting Command recently announced he was going to force thousands of recruiters to start working six-day workweeks, characterizing it as “a warfighting imperative.” He was quickly overruled, as the Chief of Navy Personnel said one day later that he was putting the plan on hold.  

Twitter users unleashed a few broadsides…

In their defense, they’re doing the whole “Inclusion” thing. Just glad they listened and left out the CCP flag.

— Abe Froman™🇺🇸 (@WerIstDeinPa) July 4, 2023

The U.S. has a defense budget approaching a trillion dollars a year but can’t afford a competent graphic designer. 😂😂😂

In a now deleted Tweet the US Pacific fleet wished everyone a Happy Independence Day with a cool graphic featuring Su-27 fighters and a silhouette of a… pic.twitter.com/lvQnyKErxU

— Chebureki Man (@CheburekiMan) July 4, 2023

Pacific Fleet scrambled to delete the tweet and replace it with one that used a photograph of a US aircraft carrier and submarine as the backdrop:  

Happy Independence Day! Celebrating life, liberty, and the pursuit of happiness for 247 years, and those who stand to protect. 🇺🇸#IndependenceDay #4thofJuly #USNavy pic.twitter.com/9hTMqmKJCc

— U.S. Pacific Fleet (@USPacificFleet) July 4, 2023

However, the replacement tweet was subjected to its own ridicule: 

The USS Rustoleum…. pic.twitter.com/s0hH4sr2nQ

— Bill Juftes (@BillJuftes) July 4, 2023

How embarrassing. Why don’t you paint that rust bucket and show it the respect it deserves. Spending all your money on diversity?

— ThatGuy (@0BrianDavidson0) July 4, 2023

Via SchiffGold.com,

The Federal Reserve has hiked interest rates to levels not seen since before the financial crisis in 2008. The money supply had contracted at a rapid rate. This should cause the economy to slow down. Yet month after month, we get strong job numbers, rosy economic headlines, and assurances that the economy remains robust.

What exactly is going on here? Why hasn’t the predicted recession materialized yet?

Of course, the economy isn’t as strong as the headline numbers suggest. But economist Daniel Lacalle suggests another reason the data isn’t reflecting any kind of significant economic slowdown. He calls it “the nationalization of the economy.”

The entire burden of the monetary collapse and rate hikes is falling on the shoulders of families and small businesses, while large corporations and governments are virtually unaffected.”

I think a crash is looming. Even economists at the Fed concede there are big cracks in the economic foundation. But Lacalle makes some interesting points worth considering that could explain why we haven’t seen a steep economic downturn and why price inflation remains persistent.

The following article was published by the Mises Wire. The opinions expressed are those of the author and do not necessarily reflect those of SchiffGold or Peter Schiff.

Allow me to explain why we have not seen a recession yet despite the collapse in the base money supply. We are witnessing the stealth nationalization of the economy.

What does this mean?

The entire burden of the monetary collapse and rate hikes is falling on the shoulders of families and small businesses, while large corporations and governments are virtually unaffected.

Thus, when an agent like the state, which weighs 40 to 60 percent of GDP in most economies, continues to consume wealth and spend, gross domestic product does not show a recession even though consumption and private investment in real terms are declining. Bloated government spending is disguising a private sector recession and the decline in real disposable income, real wages, and margins of SMEs (small and medium enterprises). Furthermore, the accidental and exogenous factor of widespread weaker commodities is boosting the external contribution of gross domestic product.

These are the main reasons why we are living in the middle of a recession and the destruction of private wealth and wages, but the official data does not reflect it. As government weight in the economy rises faster, technical recessions may not appear in the official data, but citizens suffer it, nevertheless. The reader may think that this is good news because the spending of governments goes straight to the citizens via social spending. However, there is nothing that the state provides that it does not take away from the private sector now or in the future -deficit spending now means higher taxes and lower real wages afterward. Therefore, the flip side of “no official recession yet” is “more public debt now and after”.

The rapid decline in global money supply is staggering, at -3,4% at the end of the first quarter according to Longview. Meanwhile, in the United States, the money supply is also contracting at the fastest pace since the great recession. Consider that, in the same period, government indebtedness at a global level is up 3% and United States borrowing has also risen faster than real GDP, according to the IIF. And those deficits are financed even if the cost is higher. Governments do not care about rising borrowing costs, because you pay for it.

This all basically means a drain of liquidity for the private sector will continue for a prolonged period. Central banks scratch their heads, wondering why inflation remains persistent despite the complete reversal of the supply chain disruptions and the roundtrip of the international prices of commodities, so they keep hiking rates which have a direct negative impact on families and SMEs. Large corporations have no significant problem with higher rates, as they can access credit without any problem, finance themselves at better rates than many sovereigns, and most are swimming in cash after years of prudent balance sheet management. Some may go bust, but this is not a monetary tightening that will affect the mega caps in most cases.

So why does inflation, especially core CPI, not react faster to rate hikes? Because the largest economic agent in the economy does not care and is not reducing its imbalances. Bloated governments are consuming even more units of newly created money and that is why aggregate prices fail to reflect the price contraction of external factors like freight or energy. Furthermore, as we have seen in the gross domestic product figures of many European nations, the rents components of GDP show a massive increase in the tax rents side, while gross added value of businesses and the gross wage component remains below pre-pandemic levels. Congratulations, you wanted socialism, this is socialism: Lower real wages, lower real disposable income, and lower real savings.

With the current slump in money supply, inflation should be half what it is now, and this is even considering the tweaks in the official calculation of CPI. However, money velocity is not declining because state consumption of newly created currency units is rising despite poor real private consumption and investment. If we think of the quantitative theory of money, this may be the first private-only recession because money supply declines and money velocity growth coming from the public sector offsets it.

I am writing this column from Argentina, which is suffering a 108 percent inflation. The problem when government spending ignores any monetary tightening is that the second leg up of inflation comes from even higher state subsidies using new units of currency, and the downward spiral may start and become impossible to stop. As the interest rate and credit access of the backbone of the economy, households, and SMEs, gets worse and dries up, governments step in to solve a problem they caused by creating even more entitlement and subsidy expenditures with constantly depreciated units of currency. Of course, the U.S. and developed economies are still far from the insanity of Argentina’s 1,670 percent increase in base money (M2) in the past ten years but remember that “once you pop you cannot stop”.

The money supply slump and rate hike path so far are destroying the backbone of the economy, families, and small businesses. Normalization of monetary policy without normalization of government spending and deficits is the recipe for stagnation.

You can read more by Daniel Lacalle at DLacalle.com.

Authored by Simon White, Bloomberg macro strategist,

Inflation’s current fall is set to wrong-foot investors as its entrenched nature leads to a re-acceleration in price growth and a secular rise in long-term yields.

It’s not over yet. While headline CPI in the US continues to fall from recent highs, the genie is out of the bottle, and underlying structural drivers threaten to re-elevate inflation after the current bout of disinflation peters out.

Bonds are short-term oversold, but longer-term yields are prone to a structural rise as bondholders demand extra compensation for price growth that has become embedded.

Inflation can be thought of as a play in three acts. The 1970s are considered an imperfect analogy for today, but it in fact captures much of the essence of inflationary episodes.

In that period, we had the initial burst of inflation due to overly loose fiscal and monetary policy in the late 1960s. Then there were rate rises and a recession leading to a fall inflation, and a premature belief the worst was over. This was followed by a resurgence in CPI in the mid-1970s, ultimately requiring the Volcker rate sledgehammer to pacify it.

As the chart below shows, Act II in the 1970s lasted about three years.

Today, however, that time period could be considerably compressed – with inflation beginning to rise again in as little as six months – due to three reasons:

1. Very limited spare capacity in the labor market

2. Persistence in elevated profit margins, leading to a profit-price-wage spiral

3. Stimulus in China provoking a re-acceleration in global and US inflation

Act III in the inflation play will lead to an aversion to longer-duration assets and a structural rise in longer-term yields as term premium prices higher.

Despite 500 bps of rate hikes since last year, the unemployment rate remains near its historical lows. Productivity is depressed too. Together that means spare labor capacity in the US is as low as it’s been for at least 50 years. As the chart below shows, this likely limits how far inflation can fall before labor-market tightness rekindles it.

When this happens depends on where the inflection point is on the Phillips curve (unemployment versus inflation). The notion of a linear Phillips curve is long gone, with reams of research showing a non-linear relationship between prices and joblessness (e.g. here and here).

Today we are on the steep part of the curve, where inflation can fall without leading to a rise in unemployment. But if inflation does not fall far enough to get us to the inflection point – and the flat part of the curve, where unemployment starts to rise while inflation is steady – then it is poised to increase again due to the underlying tight labor-market conditions.

This is what we saw in the mid-1970s. After the initial drop in inflation, CPI soon returned to levels that were consistent with the rising trend in wages and the falling trend in productivity, both of which are present today.

One of the main reasons why the 1970s are not seen as a fit for the present is the considerably lower level of worker unionization. That was the inflation vector that led to the wage-price spiral. But in the current cycle, profits show increasing signs of performing that role, feeding a profit-price-wage spiral.

There are several ways of looking at profit margins, but all of them show a marked increase since the pandemic. The US PPI report estimates the margins of sectors across the economy. As the chart below shows, the percentage of sectors with rising margins on an annual basis has fallen from its peak but remains elevated, and this is consistent with inflation remaining supported.

Profit margins could of course fall all the way back to their pre-pandemic levels, but it’s unlikely. As a recent article from the Institute for New Economic Thinking highlights, when the initial cost-push shock is large (as the commodity rise was in 2020/21), it can lead to persistent price rises, as prices across sectors adjust to the input-cost increase at different times.

Companies are constantly trying to catch up with price increases from other companies.

What might be the catalyst for profit and wage-led inflation to be revived? A prime candidate is China. It is the core driver of global inflation, and its halting recovery is one of the main reasons the disinflation in the US and the rest of the world has been so steady.

CPI is barely above zero in China, while PPI is deflationary. This is not something policy makers in China can tolerate indefinitely as growth stagnates and youth unemployment tops 20%.

China will continue to incrementally ease fiscal and monetary policy, and PPI will soon begin rising again, in as little as six months.

The chart below shows that China’s PPI has become closely correlated with US term premium in recent years, and therefore a rise in PPI threatens to lead to structurally higher longer-term US bond yields as global inflation risks rise.

A realization the inflation play is not over – merely getting ready for the next act – will leave high-duration assets looking ever more exposed, and real assets looking underpriced.

One month after Elon Musk met with top Chinese officials, praised the country’s technology development, and visited Tesla’s Shanghai factory, the world’s richest man signed a truce with Chinese automakers to end the yearslong brutal electric vehicle price war. 

Musk was among 16 EV company executives who signed the truce to create stability in the world’s largest EV market. 

The signing event occurred at the China Auto Forum in Shanghai on Thursday. It included execs from China FAW, Dongfeng Motor, SAIC Motor, Changan Automobile, BAIC, GAC, China National Heavy Duty Truck, Chery, JAC, Geely, Great Wall Motor, BYD, NIO, Li Auto, and XPeng Motors. Tesla was the only foreign brand to sign.

Below is an excerpt that outlines the four points to which each automaker has pledged to rein in the price war:

First, we will abide by the rules and regulations of the industry, regulate marketing activities, maintain a fair competition order, and not disrupt the fair competition order of the market with abnormal prices.

Second, we will pay attention to marketing methods, will not exaggerate or conduct false marketing, not to mislead consumers to attract attention and increase customer acquisition.

Third, we will put quality first, use quality-oriented, high-quality products and services to meet the people’s needs for a better life.

Fourth, we will actively fulfill our social responsibility, and take an active role in helping to stabilize economic growth, increase confidence and prevent risks, and work together to make a contribution to national economic growth.

The truce follows a yearslong EV price war after Tesla reduced prices on its Model 3 and Model Y last year in the face of rising domestic competition.  

Bloomberg noted, “The Ministry of Industry and Information Technology directed the China Association of Automobile Manufacturers to bring the 16 companies together to sign the pact.” 

Here’s the latest EV price discounting by brand: 

The price war also unleashed a wave of anger among Tesla customers who “complained at stores and distribution centers, with some even ransacking a so-called Experience Center,” Bloomberg said. 

Tesla has also slashed prices in the US, unleashing a price war in the second-largest EV market. 

By Jane Foley, Rabobank Senior FX strategist

Earlier this week the US yield curve hit a milestone; it has now been inverted for a full 12 months.  The 2-10 yr yield spread also briefly hit its most extremely level since the Volcker era in the 1980s. The recessions signals are difficult to ignore.  The San Francisco Fed has maintained that yield curve inversion has only provided a false signal of forthcoming recession once since 1955.  Despite this, the economic backdrop in H1 in the US and other service dominated economies can be better described by ‘resilience’ rather than ‘recession’.  In the face of higher interest rates, stocks market gains in the first half of this year were built around widespread upgrades of GDP forecasts for the period in much of the G10 and by related sturdier outcomes for corporate results.  Looking ahead for the second half, a critical question is to what extent the balance will tip further towards recessions risks and erode some of the resilience that has characterised economic activity in the US and other part of the G10 in the first half of the year. 

This morning market sentiment has turned sour.  Yesterday’s release of the minutes of the June 13-14 FOMC meeting revealed that some members of the Fed’s rate setting committee were prepared to tighten policy last month on the back of a very tight labour market, stronger than expected momentum in the US economy and few clear signs that inflation was on a path that would result in a return to the 2% inflation target.  As we know, the committee eventually agreed to pause the rate hiking cycle last month, but the risks of a July hike are strong.  The market implied risk of a July move has had edged higher on the back of the minutes.  Comments from the FOMC’s Williams yesterday that economic data supports more action on policy from the Fed echoed the sentiment expressed in the report. That said, market participants are far from convinced that the Fed will follow through with a second hike after this month.  This week’s key data releases will add color to this outlook. 

While services dominated economies tended to outperform in the first part of this year, manufacturers were mostly on the back foot.  This has resulted in the disappointing post pandemic recovery for China.  Concerns that Chinese policymakers may not be so forthcoming with stimulus as had been hoped added to the gloomy sentiment across markets in Asia overnight.  Today marks the first of a four-day visit by US Treasury Secretary Yellen to China.  Her trip follows that of Secretary of State Blinken.  Both visits are aimed at softening the strains that exists between the two nations, but Yellen’s trip coincides with a build-up of tensions regarding semi-conductors.  China this week announced it would curb exports of some key materials used in the production of high-power compound semi-conductors.  The world’s second largest economy maintains a dominant position in the market for rare earth metals and this includes germanium and gallium which will fall under export curbs from August 1.  China’s announcement came just days after the Netherlands followed the US and Japan in unveiling new restrictions of semi-conductor production tools.  While Yellen has a catalogue of topics to discuss with Chinese officials which include Ukraine, Taiwan and broad national security risks, the latest step up in trade tensions will overshadow the mood.

Soaring ADP employment data and tumbling continuing claims are not what The Fed wants to see, and Dallas Fed President Lorie Logan unleashed the hawkish hammer, refinforcing her belief that more restrictive policy is needed for FOMC to reach its goals.

Putting it all together, markets swung chaotically.

Stocks plunged…

Bond yields spiked with 10Y back above 4.00%…

The 2Y Yield spiked back above 5.00% (and above the pre-SVB highs), back to its highest since June 2007…

The yield curve crashed…

Gold plunged…

Oil dropped…

Bitcoin pumped and dumped…

Good news is bad news again and stocks seem to suddenly be aware that higher rates are bad for long duration assets.

After unexpectedly dropping in the prior week – allegedly due to Juneteenth adjustments – initial jobless claims were expected to rebound higher last week (despite the unexpected surge in ADP employment data) and they did. 248,000 Americans filed for first-time unemployment claims last week (up from 236k, revised lower – the prior week). On a NSA basis, claims erased all of the ‘improvement’ of the prior week…

Source: Bloomberg

However, continuing claims continue to drift lower (at 1.72mm from 1.733mm last week)…

Source: Bloomberg

That is the lowest continuing claims print since Feb 2023.

The apparent decoupling of initial vs continuing claims could be more of a rotation (as we noted in the ADP report) from high- to low-paying jobs.

Cash-strapped Americans are panic-searching “pawn shop near me.” The search trend spiked to a record high at the start of July and is an ominous sign the consumer might be pawning items or selling things that were possibly bought during the Covid boom to raise quick money amid the worst inflation storm in a generation. 

Let’s begin by analyzing Google search data for “pawn shop near me.” The search trend started surging in January and exploded higher in the last few months to record highs just days ago. 

Interest in the search trend is nationwide. Some of the most interest is in the Deep South.

Google provides related search trends that are all in “breakout” territory, including “pawn shop,” “open pawn shop near me,” “pawn shop open,” and “cash pawn shop near me.” 

Perhaps ‘Bidenomics’ isn’t working. Consumers, who’ve endured more than two years of negative real wage growth while depleting savings and racking up record amounts of credit card debt in the highest interest rate in a generation, are tapping new lifelines by panic selling items for cash. Think about all those stay-at-home purchases consumers made during the pandemic…

This could be more evidence the consumer is cracking. Companies, such as Cheerios maker General Mills and Walgreens Boots Alliance, have recently warned about a weakening consumer. Goldman’s Rich Privorosky told clients last month, “Something is not quite adding up on the consumer” and asked, “Have we just run out of excess savings and are we returning to replenishing savings?”

Via SchiffGold.com,

Excluding another big sale by Turkey, central banks were net buyers of gold in May, according to the latest data compiled by the World Gold Council.

Eight central banks added gold to their reserves in May with net purchases totaling 50 tons.

But with Turkey dumping another 63 tons of gold in May, global net central bank gold holding fell by 27 tons.

Turkey has sold nearly 160 tons of gold since March. According to the World Gold Council, this is a response to local market dynamics and doesn’t likely reflect a change in the Turkish central bank’s long-term gold strategy.

According to the WGC, “Gold was sold into Turkey’s domestic market to satisfy very strong bar, coin and jewelry demand following a temporary partial ban on gold bullion imports.”

According to a Reuters report, the Turkish government suspended some gold imports in February in an effort to soften the economic impact of significant earthquakes.

Poland was the biggest buyer in May, adding 19 tons of gold to its reserves. This follows on the heels of a 15-ton increase in April when the National Bank of Poland resumed buying gold. May’s purchase was the largest increase in the country’s reserves since June 2019 when the bank boosted gold holdings by almost 100 tons.

In the fall of 2021, Bank of Poland President Adam Glapiński said the central bank planned to add 100 tons of gold to its reserves in 2022. It’s unclear why the bank didn’t follow through. This recent purchase could signal the beginning of another round of buying to reach that 100-ton goal.

Poland currently holds 263 tons of gold.

The People’s Bank of China extended its gold buying spree for a seventh-straight month with a 16-ton addition to its official reserves.

Since recommencing reports of purchases in November 2022, the Peoples Bank of China has added 144 tons to its official gold holdings. Officially, Chinese gold holdings stand at 2,092 tons.

The Chinese central bank accumulated 1,448 tons of gold between 2002 and 2019, and then suddenly went silent until it resumed reporting in November 2022. Many speculate that the Chinese continued to add gold to its holdings off the books during those silent years.

There has always been speculation that China holds far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many people speculate that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE).

Last year, there were large unreported increases in central bank gold holdings.  Central banks that often fail to report purchases include China and Russia. Many analysts believe China is the mystery buyer stockpiling gold to minimize exposure to the dollar.

The central banks of Singapore (4 tons), Russia (3 tons), India (2 tons), the Czech Republic (2 tons), Iraq (2 tons), and the Kyrgyz Republic (2 tons) were the other notable buyers.

A statement by the Iraqi central bank said, “The purchase came with the aim of increasing its holdings of gold in light of the economic and political conditions that the world is witnessing.”

Along with Turkey, the Central Bank of Uzbekistan and the National Bank of Kazakhstan were both sellers, reducing their holdings by 11 tons and 2 tons respectively. These two banks were the biggest sellers of gold during the first quarter of this year.  It is not uncommon for banks that buy from domestic production – such as Uzbekistan and Kazakhstan – to switch between buying and selling.

Despite the dip in overall global reserves in April and May due to Turkish selling, it doesn’t appear central banks have lost their appetite for gold. After a record-setting 2022, central banks continued to buy gold in the first quarter of 2023, setting a new Q1 record.

Overall, global central bank gold reserves increased by 228 tons through the first three months of 2023. This was 38% higher than the previous first-quarter record set in 2013.

Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. It was the 13th straight year of net central bank gold purchases.

According to the 2023 Central Bank Gold Reserve Survey recently released by the World Gold Council, 24% of central banks plan to add more gold to their reserves in the next 12 months. Seventy-one percent of central banks surveyed believe the overall level of global reserves will increase in the next 12 months. That was a 10-point increase over last year.