Wealthion Macro Bites 1-7-26

At its 2026 Work Conference (Jan. 5-6) the PBOC reemphasized pursuit of moderately loose monetary policy in ’26 to achieve “high-quality economic development and reasonable price recovery.”  The PBOC telegraphed use of monetary policy tools such as cuts in its reserve requirement ratio (RRR) and interest rates.

In escalating reaction to Japanese Prime Minister Sanae Takaichi’s Nov. remark that Chinese invasion (or blockade) of Taiwan would constitute a “survival-threatening situation” for Japan justifying military response, China’s Ministry of Commerce announced on Tuesday an immediate export ban on various “dual use” exports to Japan.  The Ministry’s previously published catalog of dual-use items (civilian and military applications) includes rare earths, advanced electronics, aerospace and aviation components, drones, nuclear-related technology.  Japan’s Chief Cabinet Secretary Minoru Kihara promptly called China’s export ban “absolutely unacceptable and deeply regrettable.”

For the fourteenth straight month, China’s PBOC increased its gold holdings in December, this time by 30,000 ounces (same as Nov.) to reach 74.15M ounces (worth $320B).  The current value of reported PBOC gold holdings totals an all-time high 8.5% of total F/X reserves (vs. 8.3% in Nov. and 5.5% in Dec. ’24). 

Especially during 2025, Wall Street consensus speculates China’s official gold purchases far exceed reported amounts (Goldman Sachs, Societe Generale).  Since Nov. ’24, China has increased its reported gold reserves by 42t.  Spanish daily El Pais shared research in late-Nov. suggesting the actual rate of recent accumulation has been as much as five times larger and quotes Japan Bullion Wholesale Market Association Director Bruce Ikemizu, “The PBOC’s total reserves are more than double [reported 2,300t]; they are around 5,000t.”

3-Mos. LME nickel prices spiked more than 10% on Tuesday (biggest gain in 3 yrs.) to an intraday high of $18,785/t, before closing +8.9% ($18,524/t).  The spike extended nickel’s run since 12/16/25 to 30% and is attributed to the combination of ’26 Indonesian export quotas and surging investment in China’s domestic metals markets.

Reuters observes President Trump’s motivation for Maduro’s capture stretches beyond narcotics and oil supply to White House concern about the waning global prominence of the “petrodollar” system.  Keeping future production of Venezuela’s 300B barrels of reserves in U.S. orbit would create a lot more petrodollars than would otherwise be the case.

European bonds ticking higher 3bps-5bps across the board.  10-year Treasury yield -3.3bps (4.140%).  DXY dollar index +0.03%, spot gold -0.95% and spot silver -2.7%.