While I believe we will be in a secular bull market in gold for several more years, it’s time to be not just cautious on the metal, but an outright seller. April brought some hope to the gold bulls, with a brief break above $900 an ounce, based in part on the notion the Chinese government was about to ease out of its dollar reserves and into gold. But that was based on a mistaken read of Beijing politics, and some naïve ideas about the utility of the metal as a reserve asset.

The Chinese government has been sending a series of messages to the US administration about the risks of its optimistic budget plans. Most of those are not so veiled hints about international monetary system “reform”, ie de-dollarisation. A couple of weeks ago, though, the State Administration of Foreign Exchange, which manages the largest part of the country’s foreign currency assets, announced that its gold holdings now came to 1,054 metric tonnes, 70 per cent higher than it had previously reported.