01 May 2015
Who buys or sells (to China) matters
I have a post up about an article Steven Saville of The Speculative Investor wrote in January saying that “focusing on the changes in gold location is pointless if your goal is to find clues regarding gold’s prospects.” While I get what he was trying to debunk, I think he has thrown the baby out with the bathwater in doing so.
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The gold blogs have lots of ‘data’ on the size China’s and India’s gold imports, if these numbers are to be taken as true, then the size of these purchases by current trend will exceed annual mined output.
ReplyDeleteThe source of this gold is of interest to us. The soothsayers are saying that central banks are selling vociferously and ambushing the price of gold to support their fiat fairy tale.
To prove or disprove this is not easy.
A formal declaration of China’s gold holding may well cause curious minds to ask who sold it to them.
Who is buying and who is selling doesn’t matter, unless it’s a central bank acting sly.
Aren't you confusing China (as in the People's Bank of China) with the Chinese (as in 1.4 billion retail investors and jewelly magpies)? How will a "formal declaration" tell you anything about where - or indeed when - the Gold came from, and what influence that is likely to have on the future price of Gold?
ReplyDeleteLets go off the scale and imagine that the Peoples Bank now has 25,000 tons. Is that a Good Number, or a Bad Number? How about 50,000 tons? If an Asian Central Bank canbuy up 50,000 tons of Gold and still the price collapses, what does that tell us? OK, so lets go the other way. How do we feel about 1500 tons? Lies, all lies, of course, because we "know" they have more. Far more. So why are they lying to us? What are they trying to do to the price of Gold by lying to us? 2,000 tons? Still lying - more, much more...... 5,000 tons? Closer, but I still think they've got some more stashed away, "acting sly". Ok, ok, I'll 'fess up: it's 10,000 tons - there, I've told you. So what?
In fact, that stupid little exercise surely illustrates one key point: the amount of Gold which "China" holds exerts far more influence on some people's fantasies than it does on the price of Gold, and many commentators already "know" the answer, to the point where if it turns out they don't, then it must surely be because a central bank is "acting sly", just as surely as J P Morgan manipulates everything all the time (in both directions simultaneously), and COMEX charts are just "painted".
Here's the dope: it appears that it will take more than the combined efforts of the Chinese people and the Chinese central bank to reverse the current trajectory of the Gold price; certainly, merely publishing a few historical records is unlikely to have any enduring influence in either direction.