92 Tons Gold Rush to Japan Amid US 45-State Currency Crisis

On July 31st, as a key figure in the ceasefire negotiations between Palestine and Israel, Hamas leader Ismail Haniya was killed in an Israeli airstrike at his residence in Tehran, the capital of Iran.

At the same time, according to a report by the Lebanese National News Agency on July 30th, Israel carried out an airstrike on the southern suburbs of Beirut that day.

In addition, as of the press time on July 31st, an American official stated that on July 30th local time, the United States launched a "defensive" airstrike on Iraq, which is said to be the first attack by the U.S. on Iraq since February...

These signs intertwined indicate that the geopolitical tensions in the Middle East are spiraling out of control and having a significant impact on the global economy.

Against this backdrop, on July 31st, market concerns about geopolitical conflicts rapidly escalated.

As of press time, the spot gold and international oil prices quickly rose, with gold turning from a decline to an increase, rising by about $3 in the short term.

The increase in Brent and WTI crude oil prices expanded to 1.5%.

At the same time, on July 31st, the Bank of Japan unexpectedly raised interest rates by 15 basis points, increasing the policy rate to 0.15% - 0.25%, which exceeded the expectations of most people in the market, ending Japan's zero interest rate level for many years.

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As the Bank of Japan's stance turned hawkish, it triggered an increase in the yen, and European stock markets followed Asian stock indices higher on Wednesday.

Bank of Japan Governor Haruhiko Kuroda stated that he does not rule out the possibility of raising interest rates again this year and hinted at preparations to steadily increase borrowing costs to a neutral level for the economy in the next few years.

These tough remarks led the US dollar to yen exchange rate to fall below 151 yen for the first time since March, as the market realized that Japan has finally started a comprehensive interest rate hike, and Japan has officially reversed the ultra-loose monetary strategy of the past decade.

The Bank of Japan also announced a detailed plan to slow down its large-scale bond purchases, taking another step towards gradually withdrawing from a decade of large-scale stimulus plans.

Analysts believe that this also means that although the Federal Reserve has clearly entered the interest rate reduction channel, the Bank of Japan is doing the opposite, rapidly raising interest rates and shrinking the balance sheet, and will sell and liquidate a large amount of U.S. Treasury bonds.

According to a forecast by a public finance economist in Washington, as the largest holder of U.S. debt - Japan is about to sell at least $400 billion worth of U.S. Treasury bonds, which may destroy the proportion of U.S. Treasury bonds in the global overseas market.

Obviously, this is not a good expectation for the U.S. debt economy model and the global reserve currency status of the U.S. dollar, which has officially broken through the 35 trillion yuan mark, and continues to be mired in the Middle East geopolitical predicament, and the risk of potential debt ceiling deadlock is intensifying.

Because currently only Japan's holdings of U.S. Treasury bonds exceed the scale of trillion yuan, Japan is raising interest rates and shrinking the balance sheet at the same time, selling a large amount of U.S. Treasury bonds, and accompanied by the Federal Reserve's interest rate cuts, the U.S. dollar to yen exchange rate is predicted to weaken for a long period of time in the future, that is, the weak dollar cycle is about to appear.

This is tantamount to Japan openly creating a financial Pearl Harbor event in the currency field.

As we all know, the fundamental reason why global buyers have favored U.S. Treasury bonds for many years is the strength of the U.S. dollar as the global reserve currency.

Holding U.S. Treasury bonds can often avoid being harvested by U.S. dollar capital.

And when the largest overseas buyer of U.S. debt publicly "declares war" on U.S. Treasury bonds, the U.S. debt economy model supported by the Federal Reserve as the largest domestic buyer of U.S. debt almost lacks global liquidity.

To make matters worse, the third largest holder of U.S. debt, the United Kingdom, declared bankruptcy on July 28th.

The office of the British Prime Minister said on July 28th that the country is "bankrupt and fragmented".

The new British Chancellor of the Exchequer, Rachel Reeves, said that the previous government made a series of unfunded commitments, significantly overspending the UK's fiscal budget this year.

It is reported that the assessment results will show that the UK has about "20 billion pounds of public finance gap".

This means that the UK may also be unable to take over the potential wave of U.S. debt sales by Japan.

And other allies of the United States, the scale of U.S. Treasury bonds and foreign exchange reserves cannot reach the level of becoming mainstream holders of U.S. debt.

Especially Germany, France, Italy and other European countries, the proportion of gold reserves in foreign exchange reserves is as high as 65%, and even more than 70%.

And the proportion of U.S. Treasury bonds in their foreign reserves is quite limited, so in the context of losing the largest buyer in the world, Japan's large purchase of U.S. Treasury bonds, and the UK's inability to take over, the influence of U.S. Treasury bonds among its allies may be in a state of hollowing out.

According to a set of reports published by the World Gold Council in July, Japan currently has 846 tons of gold reserves.

From 2000 to 2024, Japan's average gold reserves were 775.75 tons, which means that after reaching the historical low level of 753.55 tons in the second quarter of 2000, about 92 tons of gold reserves were urgently transported from the gold markets in the United States and Europe to Japan.

This seems to be that Japan or has a premonition of some big events.

And currently, Japan's gold reserves account for about 5.2% of its foreign exchange reserves, which is far from other major developed countries.

From this perspective, Japan has a huge space for gold reserves to increase.

Especially in the context of increasing geopolitical risks in the Middle East, the probability of Japan increasing more gold reserves at the right time is also accelerating with the country's interest rate hike and balance sheet reduction process.

This is also a potential bearish factor for U.S. Treasury bonds.

At the same time, over the past few weeks, the Bank of Japan has been leading and jointly established a joint development of digital currency group with the European Central Bank, the Swiss National Bank, the Bank of Canada, and the Bank of England.

It is reported that one of the anchors of this digital currency is gold.

The direct goal of this group is to deal with the uncertainty of the U.S. dollar in global trade and economy in the future, especially once Trump returns to the White House, if he launches more trade restrictions, even the markets of allied countries like Japan are not spared from harvesting, or charging more "protection fees", Japan, the UK, Germany, France, Italy, Canada and other allies of the United States may directly bypass the U.S. dollar.

In this regard, the U.S. financial institution ZeroHedge analysis believes that Japan is leading the developed countries to sell U.S. debt and de-dollarization, making a historical contribution to the epic collapse of U.S. Treasury bonds.

In fact, as of this July, due to the implicit default caused by the high inflation in the United States in the past few months, some Japanese banks have begun to liquidate their holdings of U.S. Treasury bonds, including the fifth largest bank in Japan, Norinchukin Bank, which is known to have sold $63 billion worth of U.S. Treasury bonds.

In addition, the larger Japan Post Bank has more than $550 billion in assets, most of which are U.S. bonds, and these assets may also be sold soon.

Analysts believe that Japan's financial Pearl Harbor event against U.S. debt and the U.S. dollar seems to be preventing potential risk events warned by Nomura analysts and billionaire Elon Musk.

Nomura analyzed a week ago that if Trump returns to the White House, in the face of huge debts and high interest rates, there is a certain possibility of refusing to repay or suspending the repayment of debt.

Musk also warned last week that the United States is heading towards bankruptcy.

The reason is that the interest payments on U.S. Treasury bonds exceed $1.14 trillion, which devours 76% of all U.S. income tax.

This also means that no matter what changes happen in the White House in November, no matter who wins the election, the bankrupt United States may exist, and there is a possibility of not being able to repay the debt in time.

Similar to Japan's early layout of gold reserves and hedging against U.S. dollar assets, domestically in the United States, several states are currently "abolishing" the Federal Reserve, which is also becoming a major change in the U.S. economy in 2024.

For example, currently, 45 states in the United States have abolished the sales tax on gold and silver, taking a step towards treating gold and silver as money rather than goods.

This means that from the perspective of gold and silver sales tax alone, 45 states in the United States have started the process of monetary self-reliance in advance.

Former U.S.

Congressman Ron Paul said that it is meaningless to tax money, on the contrary, the states in the United States should tax the green paper of the dollar and the paper money system of the Federal Reserve, which seems to be more clear in the context of the Federal Reserve entering the interest rate reduction channel, and even increasing the use of the dollar printing machine to continuously harvest the market.

Not only that, Texas, Florida, Missouri and other states in the United States have also directly announced that gold and silver are legal tender; companies can use gold and silver to pay wages and other methods, which can replace the monetary function of the U.S. dollar or U.S. Treasury bonds.

For example, Congressman Michael Granger and three co-sponsors submitted the HB1246 bill to New Hampshire last year, which will allow any company or employer in the state to directly use gold and silver to pay wages, replacing the U.S. dollar and breaking the monopoly of the Federal Reserve on money.

For example, the lawmakers of Texas have started the vote this year to "manage gold and silver through the Texas gold and silver depository, to use gold and silver as legal tender, and to replace the U.S. dollar".

Analysts believe that with the intensification of geopolitical risks in the Middle East, the United States has to passively enter the game, and this year's election storm, which can be called the most unpredictable in history, the United States has multiple states tearing up currency and accelerating the phenomenon of replacing the U.S. dollar with gold, which may also appear repeatedly.

Even some congressmen have suggested that if there is not enough money, the U.S. Treasury needs to use its 8133.5 tons of gold reserves to mint trillion-dollar gold coins, and repay some buyers of U.S. Treasury bonds that are due first.

(Note: The translation provided is an attempt to convey the meaning of the original text as accurately as possible, but due to the complexity and length of the content, some details may have been simplified or paraphrased.)