China is driving the Gold Bullion bus, likely meaning a Chinese "put" is in play...
IT SEEMS pretty clear to us vultures that the Chinese, who hold just under $900 billion in US debt, are convinced that the United States has a huge incentive to reduce its debt burden by inflating (devaluing) the greenback over time, writes Gene Arensberg in his Got Gold Report.
Mid-summer this year, China made it clear to anyone looking that they value gold and silver more than they do "paper". Multiple news sources say that China opened the Shanghai Gold Exchange to more foreign involvement. China is encouraging its banks to finance acquisitions in the bullion sector. The Chinese command and control wants its business leaders involved in bullion projects across the globe.
China is also encouraging its citizens to own gold and Buy Silver. Bullion is available at government-run banks. China is paying premiums for raw ore to be shipped there for contract milling (or milling at discounted prices)...and China has shown its gold-loving hand regardless of their official protestations to the contrary.
So sound the klaxons for 'China Forex Diversification' and 'China Embracing the Gold Trade' – a new dynamic is unfolding in the bullion markets.
With China on the demand side – on the bull side of the gold market – who is going to take the sell side? It certainly hasn't been Western central banks lately. Globally net-net, central banks have become buyers. We can say now there is a Chinese "put" under the bullion markets. That just means that bullion bears have less to work with.
You might want to keep that idea in mind as you look over the various indicators in the Western Gold Investment markets' data pile. How on earth can anyone consider being bearish of gold when they are up against more than a billion potential buyers, so to speak?
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