China has been gradually positioning the yuan and gold as alternatives to the US dollar. Besides the People's Bank of China (PBoC) replacing its US treasury holdings by bullion, reports suggest Beijing encourages trade partners to convert surpluses into gold stored in Shanghai. If even 80% of China’s trade surplus were converted, it could require 15–20% of annual global gold output — creating a powerful tailwind for prices. The bigger the surplus, the stronger the demand, and the higher the support for gold.
No surprise then that gold has attracted massive inflows this year, with appetite remaining strong even at record highs — and gold miners are reaping the benefits. Fresnillo in London, for example, has seen its share price surge more than 300% since January, compared with about 110% for Nvidia since its April low.
In the same vein, Zijin Gold International made a spectacular debut in Hong Kong this week, marking the city’s second-largest IPO of the year. The stock soared 68% on day one, giving the company a market cap above HK$300 billion (nearly US$40 billion) — performance more typical of a hot tech IPO than a miner.
Whether the gold rush continues is an open question, but for now, the arguments in favour of further gains outweigh the risks to the downside.