The David Lin Report · Monday, June 29, 2026
Michael Howell posits that China's People's Bank of China (PBOC) has been deliberately devaluing the internal value of the yuan to combat a domestic debt problem and stimulate nominal incomes. This policy, evidenced by increased PBOC liquidity injections, is closely correlated with the surge in the gold price, as Chinese residents seek inflation hedges.
“The People's Bank of China, uh in our view, is undertaking a policy where it is deliberately devaluing the internal, I'm stressing the internal value of the Chinese yuan.”
“And therefore, this internal devaluation is is They have been doing that since early 2023. The chart shows the rapid increase in PBOC liquidity injections to basically for that goal.”
“And what you can see is as the PBOC injected huge amounts of liquidity into the Chinese system, Chinese residents needed monetary inflation hedges. They were buying gold furiously, hence the Shanghai Gold Exchange has been the marginal price of gold worldwide eclipsing COMEX and London.”