Monday, February 13, 2012

Gold: Do we believe Warren Buffett or the Chinese regarding the precious metal

Last week, Obama mouthpiece and billionaire investor Warren Buffett said that gold 'has no value'.  This of course is contrary to most other foreign governments, especially China, who are proving that gold very much has a place in the monetary world as the dollar continues to devalue and more nations seek to perform transactions using the precious metal.

Traders in Hong Kong say that the Chinese continue to buy gold on any weakness. Bullion buying from China and the rest of Asia (more below) may have led to the spike higher at the open in Asia.

"The Chinese guys are still buying. Whenever there is a dip in prices, they will buy. There's no change in their attitude," said a physical dealer in Hong Kong, who trades gold bars. "They are still buying today, because I think the downside is limited for the time being. Sentiment has improved a little bit.’’

Market focus tends to be almost solely on Chinese and Indian demand but demand is broad based throughout increasingly important Asian gold markets. Demand for gold remains robust in most Asian countries where consumers are buying gold as a store of wealth due to concerns about their local paper currency.  Goldcore via Zerohedge

US investors like Buffett have their assets tied to the dollar and the need to keep the fiat currency the sole choice in global transactions.  For the benefit of his holdings and for his investors, he must continue to preach the strength of the dollar, and discount gold as worthless even as the world moves away from the printed paper.

However, in a world where every government runs on fiat currencies backed by nothing but 'confidence', gold has been, and will always be the TRUE barometer of wealth, mostly in the long term, and occasionally as an investment in the short term.


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