China is rapidly transforming the global gold market. For decades, the London gold market has been the center of the global financial system, trading paper gold instead of real gold. But now China is changing the game and attracting physical gold.
Growing Pressure on the Dollar System
The US dollar has been the mainstay of global trade for several decades. However, China is now increasing the use of yuan and gold in global trade. This means that dependence on the dollar is decreasing. According to The Economic Times and economists, if this trend continues, gold could become a weapon in financial warfare, and the next world war could be fought with gold.
China’s Gold Purchases
China’s central bank is purchasing gold at a record pace. According to data from the World Gold Council, the largest official gold purchases in 60 years occurred in 2024 and 2025. The United States holds approximately 8,133 tons of gold, representing approximately 76% of its reserves. China officially declares 2,298 tonnes of gold, but experts estimate the actual amount, including its hidden government and military reserves, could be between 10,000 and 15,000 tonnes.
From Hedging to Weapon
Economist Luke Gromen argues that the dollar’s credibility depends on gold. As China’s yuan-gold trade grows, global finance is moving from paper promises to physical power. Russia and China are also linking their trade to gold, bypassing the dollar. Experts believe that the country with the most gold will dictate global financial rules. The United States is burdened with heavy debt, while China and Russia are steadily accumulating gold. This is gradually shifting the global balance of power.
Europe and Emerging Markets
Europe is losing financial influence due to its slow policies and energy dependence. Meanwhile, China, Russia, and other emerging markets are moving away from the dollar. This means that in the future, gold could become not just an investment vehicle but a weapon of global financial and strategic power.
