Monday, November 7, 2011

Gold: While hedge funds sell, China buys and thanks naive western nations

After the nice pullback for Gold in September and early October, many investors were wondering if the drops were a signal to the end of the gold bull, or at worst, if deflation was truly on the global financial landscape.

One nation however, gleefully rubbed their hands at their good fortune, and bought and bought, and bought at the lower prices.  China, which normally purchases around 10 tones per month, increased their buying to 140 tons between July and the end of September.

Data from the Hong Kong government showed that China imported a record 56.9 tonnes in September, a sixfold increase from 2010. Monthly gold imports for most of 2010 and this year run at about 10 tonnes, but buying jumped in July, August and September. In the three-month period, China imported from Hong Kong about 140 tonnes, more than the roughly 120 tonnes for the whole 2010. - FT

So, as hedge funds sell off their only profitable asset to cover their equity, bond, and debt losses, China simply says "Thank you", and happily picks up the leavings of the western financial institutions.

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