China is draining London’s gold. The paper gold system may be reaching its limit

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INTERVIEW: “CHINA IS DRAINING LONDON’S GOLD MARKET, PRESSURING THE DOLLAR SYSTEM”

@LukeGromen
, Macroeconomic Strategist

“China is using what has always been the dollar’s Achilles heel, the unallocated gold market in London.

If demand for gold rises, there are two options.

You can let the price rise and allow the market to balance naturally, or you can expand paper gold claims to meet that demand without releasing physical gold.

For decades, London has mostly done the latter.

But now, as China settles more trade in yuan and gold, it’s draining physical supply from London.

Eventually, policymakers in the U.S. and UK will have to decide how much gold they’re willing to let go before they allow prices to rise.

That decision could reshape global monetary power.”

China is draining London’s gold market, pressuring the dollar system. The world’s real currency war has begun. Macroeconomic strategist Luke Gromen warns China is using the dollar’s weak spot — the unallocated London gold market — to shift global power. Central banks bought record gold in 2024–25. The U.S. holds 8,133 tonnes. China officially 2,298 but likely 10,000–15,000 tonnes. Gromen says gold must reprice near $12,000 an ounce to restore trust as trade in yuan and gold quietly replaces the dollar.

https://economictimes.indiatimes.com/news/international/us/will-the-next-world-war-be-fought-with-gold-here-are-the-glaring-statistics/articleshow/125017937.cms

London’s bullion market itself is showing signs of strain: copper-silver/gold physical flows into London vaults are strained, while outflows and custody shifts raise questions about supply, settlement and the integrity of the “paper gold” framework.

https://goldtrader.substack.com/p/are-we-running-out-of-gold-the-truth