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June 19, 2011
Lear Capital: China's Gold Buying Spree Continues - Commodities & Futures
In a recent article I suggested China may be toying with the West by creating its own buying opportunities for gold and silver. Over the long Easter Holiday weekend, gold prices, as well as silver, soared. Buying from the East was obviously the driver and generally, prices are more volatile when trading volume is low. A few big trades when nobody is looking and voila -- gold and silver prices appear to hit new records highs.
Then, when domestic markets open, the shock of much higher prices triggers a massive profit-taking spree. Because the selling commenced with such force, momentum caused both gold and silver to be oversold as everyone began to question the commodities bull. As prices fell, China jumped in to gobble up whatever they could at much lower prices. Then, rinse and repeat. The same thing happened the weekend after Easter with the same results.
The media tried to attribute the sell-off of gold and silver to George Soros' selling of some of his own precious metals holdings. But, when the truth came out, Soros' selling actually occurred months before while gold and silver prices were rising. Also to blame was the raising of margin requirements on futures contracts for precious metals. The last thing the COMEX needed was to have to deliver the physical metals if such demands were made.
It's only a theory, but I believe it makes sense. What didn't make sense is the rapid rise of both gold and silver prices at a time when our markets were closed. Now some interesting data has surfaced. Perhaps it supports the "Theory" perhaps not. You decide!
On May 19, a Financial Times article reported on data released by the World Gold Council that showed China bought 93.5 tonnes of physical gold in the first quarter of 2011. More interesting, however, is a comment made later in the article that China's gold imports in the first 4 months of 2011, exceed 200 tonnes. Do the math. That would mean China bought more gold in April than they did during the entire first quarter of 2011.
From a previous Fox News report we learned that Mexico was also busy buying gold in the first quarter of 2011. Per this report, 100 tons were purchased by the Bank of Mexico in February. All these transactions make the reported Soros' transaction of 10 or 15 tonnes of gold minuscule. Make no mistake, gold demand around the world is strong and growing.
Lear Capital: China's Gold Buying Spree Continues - Commodities & Futures
In a recent article I suggested China may be toying with the West by creating its own buying opportunities for gold and silver. Over the long Easter Holiday weekend, gold prices, as well as silver, soared. Buying from the East was obviously the driver and generally, prices are more volatile when trading volume is low. A few big trades when nobody is looking and voila -- gold and silver prices appear to hit new records highs.
Then, when domestic markets open, the shock of much higher prices triggers a massive profit-taking spree. Because the selling commenced with such force, momentum caused both gold and silver to be oversold as everyone began to question the commodities bull. As prices fell, China jumped in to gobble up whatever they could at much lower prices. Then, rinse and repeat. The same thing happened the weekend after Easter with the same results.
The media tried to attribute the sell-off of gold and silver to George Soros' selling of some of his own precious metals holdings. But, when the truth came out, Soros' selling actually occurred months before while gold and silver prices were rising. Also to blame was the raising of margin requirements on futures contracts for precious metals. The last thing the COMEX needed was to have to deliver the physical metals if such demands were made.
It's only a theory, but I believe it makes sense. What didn't make sense is the rapid rise of both gold and silver prices at a time when our markets were closed. Now some interesting data has surfaced. Perhaps it supports the "Theory" perhaps not. You decide!
On May 19, a Financial Times article reported on data released by the World Gold Council that showed China bought 93.5 tonnes of physical gold in the first quarter of 2011. More interesting, however, is a comment made later in the article that China's gold imports in the first 4 months of 2011, exceed 200 tonnes. Do the math. That would mean China bought more gold in April than they did during the entire first quarter of 2011.
From a previous Fox News report we learned that Mexico was also busy buying gold in the first quarter of 2011. Per this report, 100 tons were purchased by the Bank of Mexico in February. All these transactions make the reported Soros' transaction of 10 or 15 tonnes of gold minuscule. Make no mistake, gold demand around the world is strong and growing.
