• Sprott Money
    05/06/2016 - 06:03
    The US, in its own decline, is showing this same self-destructive tendency. The worse things get, the greater the inclination of the citizenry to say, “Carry on, everything’s fine.”

Guest Post: Chinese Gold Fever

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Thu, 03/10/2011 - 20:29 | 1038798 Judge Judy Scheinlok
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"In some parts of Asia, inflation is rampant. Especially in India, food prices and other staples are going through the roof."

Good.

Thu, 03/10/2011 - 21:41 | 1039042 septicshock
septicshock's picture

You stupid cunt! Those are people starving because we export our inflation. You need a foot up your ass, but then again... You probably like that.

Thu, 03/10/2011 - 22:13 | 1039134 sun tzu
sun tzu's picture

Nobody forced them to link their currency to ours. They do it in order to lure American jobs to India. This is the price they pay. Stop being such a dummy all the time. Blame the Indian politicians and elites.

Thu, 03/10/2011 - 23:42 | 1039363 ChookChoker
ChookChoker's picture

I love the contrasting insults! Both ends of the spectrum on display here. Funny thing is both opinions have a factual basis.

Fri, 03/11/2011 - 02:12 | 1039731 AldoHux_IV
AldoHux_IV's picture

They both don't get it really.  Inflation brought upon central bank cooperation is not a good thing as it represents the power a few people have over many and the reason for so much meaningless suffering in the world.  Inflation is a tool and used by the central banking cabal-- it is not specific to one or the other as all central banks trade currencies with one another.  Thus, what's going on is a form of manipulation to serve the central banking master's needs: economies of scale (i.e. cheaper labor) and finding new consumers to buy their products.  The process in which they do this only results in the few having the only access to opportunity and the many left with little or no means which is why you see the unrest around the world and rightfully so.

Fri, 03/11/2011 - 03:38 | 1039843 traderjoe
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+1

Fri, 03/11/2011 - 02:45 | 1039790 Non Passaran
Non Passaran's picture

So it is the trade deficit and not budget deficit that's making the Fed print and causing inflation?
If the US had balanced external trade, the Fed wouldn't have to print?

Thu, 03/10/2011 - 20:30 | 1038801 DrStrangelove
DrStrangelove's picture

Your pony is slow.  From March 6th.

Gold imports in China rose 500% from 2009 - 2010 to over 200 tonnes. China also mined over 340 tonnes of gold in 2010. In January and February of this year China had already imported 200 tonnes of gold. This should come as no surprise and we should realize they are just getting started with their gold buying program. China one of the lowest percentages of gold relative to the nation's foreign reserves, they must continue to import gold if they are to achieve stability and or any sort of dominance in the new monetary system that is yet to be upon us. China does not currently allow gold to be legally exported from their soil. The Chinese government has consolidated the gold mining industry this decade and the number of gold producers fell from 1200 to 700 in this time period. China relies on a handful of producers for nearly half or their production supply.

India's gold demand increased 66% from 2009-2010 to 963 tonnes. India's demand for gold currently rivals China and the USA combined. India's citizens are known for saving in gold and silver and giving large amounts of gold during the wedding season which begins in February. As a percentage of gross household savings Indians are saving much more gold.

 

http://nationaleconomist.blogspot.com/

Fri, 03/11/2011 - 05:47 | 1039918 jeff montanye
jeff montanye's picture

the low percentage of chinese household savings that is in gold seems striking.  such a lot of potential demand there.  wonder what the figure for the u.s. is?  oh that's right, the u.s. doesn't save anything (except the too big to fail).

Thu, 03/10/2011 - 20:30 | 1038805 DrStrangelove
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The India vs. China gold savings rate chart is very telling.  In India gold is over 10% gross household savings.

Thu, 03/10/2011 - 20:34 | 1038814 Judge Judy Scheinlok
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Isn't average gross income like $10 Rupees a month?

Thu, 03/10/2011 - 21:43 | 1039049 septicshock
septicshock's picture

Isn't your IQ ten?

Thu, 03/10/2011 - 22:51 | 1039218 william the bastard
william the bastard's picture

You're not smart enough to know? :

Fri, 03/11/2011 - 02:55 | 1039805 Non Passaran
Non Passaran's picture

Chuckle :-)
I thought the same just a second before I saw your comment.

(But at least I learned something - before I didn't know the currency symbol for INR is $.)

Fri, 03/11/2011 - 05:59 | 1039931 jeff montanye
jeff montanye's picture

not sure the currency the judge is using but per capita income for india is about $275 per month and it has doubled in less than ten years.  p.s. the symbol for rupee is Rs and the equivalent is about Rs 3700 per month.

Thu, 03/10/2011 - 20:33 | 1038815 SilverRhino
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And silver will ride that rising gold tide nicely.  

Thu, 03/10/2011 - 20:51 | 1038863 DosZap
DosZap's picture

Silver,

Yes TD likely left that out as it was a GOLD thread.

Silver is being INHALED by the Chinese as well,not many Chinese can afford Gold,when looking at the 1.5b + population.

But they will and can buy Silver, and are doing so at at least the rate of Gold.

Fri, 03/11/2011 - 02:59 | 1039809 Non Passaran
Non Passaran's picture

It's 1.3+ billion, actually.

Thu, 03/10/2011 - 20:41 | 1038832 DoctoRx
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Am skeptical there's a lot of highly leveraged gold owners out there.  If I'm in a BRIC, or in the Anglosphere, and I've got some saveable funds, I will want PM.  I will not want USD, or certainly not an overweighting in USD.  So I will BTFD.  It is the USD, with short term money rates at 1000X earnings, that is in a bubble.  Not Au.  No sense timing entry to Au if not yet in enough.  One bad hair day in the Mideast, or with an unknown unknown etc., and we can see a 5% move overnight.  And there will be few sellers if that happens, whereas it will take quite a lot of TPTB effort to persuade dip buyers not to BTFD on a big down-move.

Thu, 03/10/2011 - 20:45 | 1038850 Long-John-Silver
Thu, 03/10/2011 - 20:54 | 1038868 nope-1004
nope-1004's picture

Banged  your head 5 too many times.

 

Thu, 03/10/2011 - 20:53 | 1038878 Long-John-Silver
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I only posted once and it came back with a error. Then I come back and discover it's puked all over.

Thu, 03/10/2011 - 22:48 | 1039213 william the bastard
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You'll be pukin PMs by Monday PM. You know how to bend over. I can tell ya do.

Thu, 03/10/2011 - 20:53 | 1038872 DosZap
DosZap's picture

Sorry about that stutter.........since birth(;

Thu, 03/10/2011 - 20:53 | 1038871 Misean
Misean's picture

I grok. BTFD.

Thu, 03/10/2011 - 20:55 | 1038880 Long-John-Silver
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The Chinese will do just that tonight.

Thu, 03/10/2011 - 22:47 | 1039209 william the bastard
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yeah they will

Thu, 03/10/2011 - 21:35 | 1038895 DavidPierre
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A Pause?

There are no safe havens in the world today, as all the markets are down, oil, base metals, gold and silver are all getting pounded. The one exception is the dollar...dead cat bounce.

It is very rare to have all markets and sectors trading in sync like this, and the question then is which sector will begin to show positive divergence from this trend first?

Assume that most of the downside volatility today is a result of spec traders pulling in leverage, unwinding longs after a strong run. There is nothing fundamentally different about the set up for oil, or the metals today that was not priced in yesterday.

Similarly the dollar is enjoying a rally as shorts take profits and close positions. 

Is this a sign the market has priced in some measure of security?

Recall that during the unrest of the last few weeks the dollar was mostly lower and did not appear to represent any haven.

Gold and silver have posted some huge gains during the last few weeks and were into overbought territory. A correction is both necessary and healthy, and no doubt has been helped along by some ambitious shorting by the Cartel in the early going today. The downdraft in the metals will draw in even more buying in the days ahead.

How long can the PM shorts go before they act to cover some of their outstanding position?

With the physical market so tight it will not take much to recover the losses very quickly. This week may be seen in hindsight as the pause, a cooling off in the sector ... allowing some consolidation before the next move.

Buy your favorite juniors. Some stocks have dropped more than 20% in just a couple of days. Perfect!

The options and warrants have been hit even harder. Bids that were  far below market were filled easily today.  Never discount the possibility that further downside may come... set new bids even further below the current market prices just in case. There are still some big up gaps that may be filled to the downside before things settle down. But the longer term direction for all commodities remains up and the stocks will follow.

There has been some new money moving into the sector this year. People who have not seen this sort of thing before are probably shell-shocked and selling into this blitz. But there are many sector veterans that are happily buying in this action.  The transfer of PM shares into stronger hands will set the foundation for the next big rally. It may come sooner than many expect.

We will have to put up with some backslapping by the top callers after today... giddiness on financial networks today after reporting the downside in precious metals. They pull up a chart for silver and then note the heavy buying lately, then point out the loss today, and commented 'contrarian dream' or some such nonsense.

But put all this in perspective: even this nasty down move has washed just a buck and change per ounce off the record highs for silver. A move of maybe 3%?

And in gold the damage has been maybe $40 off the highs, also about 3% to the downside. Is this a big deal?

The top callers were putting out their spin below $30 and now some take credit for getting it right? And talking heads chuckle that the metals are lower even as the DOW was down by nearly 200 points today. Gold and Silver are far from a top.

People were making scary predictions for doom back in January too and the metals exploded higher leaving many in the dust. Even the epic meltdown in 2008 was recovered in less than a year for gold and two years for silver.

There is far too much angst generated over the downside in this market and far too little interest in holding on for what could be the biggest gains yet in the years ahead.

Buckle up and ride out the inevitable volatility along the way and try to buy dips when the opportunity comes along.

Why care about a short term downside of a few bucks when the potential for several hundred percent gains remain realistic and achievable?

Let the bears have their day and the top callers can pound their chests and claim a temporary victory. This entire move will be a tiny blip in the long term chart that no one will remember in a short time.

The Cartel will push even harder for a washout ...the metals will recover.

Trying to predict what happens in the next few days is not important. Be happy for an opportunity to buy quality companies on a dip, and build leverage for the next uptrend that will happen. The rest is just noise.

www.lemetropolecafe.com

Fri, 03/11/2011 - 04:13 | 1039871 Lord Koos
Lord Koos's picture

Stocks are going down on their own, but the fact that metals are also going down points to the manipulation.  Overbought?  They are just getting started.

Fri, 03/11/2011 - 06:49 | 1039953 Snidley Whipsnae
Snidley Whipsnae's picture

The fundamental fact is that the Fed and other central banks have not stopped printing fiat to the moon. The Euro Zone has at minimum four countries that are near soverign default.

Until the excessive fiat printing stops PMs will not stop their secular trend upwards...and paper gold is not gold and not a safe haven, but a manipulative device that can be and is being used by the CBs to hold PM prices in check.

Of course the CBs are going to pull out every trick in their bag to derail PM priced in fiat and they will cause some scary dips. Leveraged PM buyers will be shaken out...BTFDs... PMs are the only place to stand that is safe from the economic train wreck that is in progress.

 

Thu, 03/10/2011 - 21:10 | 1038930 boeing747
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Old news ZH, Chinese national banks can import Gold by themself for future trade purposes. Chinese bought silver by kilo, I told you before. FYI, now they also buy stamps, jades, and precious stones/engraving stones(some valued 100 times over Gold).

Another FYI:

"Utah took its first step Friday toward bringing back the gold standard when the state House passed a bill that would recognize gold and silver coins issued by the federal government as legal currency. The House voted 47-26 in favor of the legislation".

Thu, 03/10/2011 - 21:40 | 1039038 DavidPierre
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Sen. Bill Ketron wants TN to consider creating its own currency.

Ketron has filed a joint resolution to create a committee that would study whether Tennessee should adopt a currency as an alternative to the federal dollar in the event of a "major breakdown" of the Federal Reserve. The proposal is part of a burgeoning movement on the part of conservative lawmakers to begin preparing for a worst-case scenario in which the Reserve collapses. Ketron's legislation mirrors almost word-for-word bills filed in South Carolina and Virginia, which passed the law earlier this year.

 

Thu, 03/10/2011 - 21:19 | 1038952 mynhair
mynhair's picture

Meethinks NFLX shorts also hold paper gold and silver.

Want to say 'stupid does as stupid is' cuz I can't for the life of me can't understand why anyone would willingly expose themselves to a forced buy-in on a POS like NFLX.

Thu, 03/10/2011 - 21:40 | 1039039 penisouraus erecti
penisouraus erecti's picture

I'm rarely confused with Einstein, but does this article indicate the Chinese are smart enough to be purchasing physical gold? That would be a good move, no?

Thu, 03/10/2011 - 22:56 | 1039233 gwar5
gwar5's picture

Exactly. China relaxed laws for owning gold and silver and told their people to go for it.

Fri, 03/11/2011 - 11:54 | 1040584 Papasmurf
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That's one means of controlling internal inflation.  When cash chases gold, it's not chasing goods. 

Thu, 03/10/2011 - 21:53 | 1039077 mt paul
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gold covered 

plastic rice...

Thu, 03/10/2011 - 21:55 | 1039082 penisouraus erecti
penisouraus erecti's picture

So, since this article is on the heels of the Lear article, if the USD were to no longer be the world reserve currency, how fucked would we be here in the US (aside from the criminal bankster element that will no doubt survive quite nicely)?

Thu, 03/10/2011 - 22:22 | 1039157 tekhneek
tekhneek's picture

Very "fucked"

Thu, 03/10/2011 - 22:46 | 1039208 william the bastard
william the bastard's picture

When all else fails, flail away w htf the wild card will bail ya out. Sign of a guy trapped in a bad trade.

 

Thu, 03/10/2011 - 22:51 | 1039221 web bot
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The basic arguments being put forth by the economists is that we don't have inflation because: 1. we have excess capacity, hence no demand pressures to push up prices, and 2. we are not seeing a rise in wages... which has is considered the trip switch by central bankers to signal inflation.

What these fine people never get around to addressing is if you are having food and energy inflation and wages are not rising... one of 2 things happen. People either stop eating... or, you know the other.

 

When you get guys like Nenner saying that a war is the only outcome for the US to extricate itself from this mess... you know things are not well.

Thu, 03/10/2011 - 23:17 | 1039290 gwar5
gwar5's picture

China gold demand stabilizes and strengthens their economy while weakening Western fiats. It's a three-for, and very shrewd move.

If China does not acquire enough gold to compete as a reserve currency they still strenghten their percentage strength as a player in any IMF SDR basket of a WRC proxy. They could also partner with Russia to obtain analternate currency hegemony. The USA is not only losing this game, we don't even appear to be playing the same game. We're playing checkers while the Chinese play chess.

Moreover, Alisdair Macleod claims China may actually have more gold than the USA because they've hoarded it for centuries and we don't really know how much they have.

Arab countries prefer gold over FRNs. Sharia complaint banking favors gold backed transactions because usury is banned. China will be increasing their oil demand for decades and having gold is a good thing for them going forward. 

Thu, 03/10/2011 - 23:25 | 1039309 tony bonn
tony bonn's picture

he who owns the gold makes the rules....tungsten don't count bitch.

Thu, 03/10/2011 - 23:30 | 1039326 Trimmed Hedge
Trimmed Hedge's picture

"Chinese gold"?

Is that the low-quality stuff that breaks after just a few uses?

*shrug*

Thu, 03/10/2011 - 23:41 | 1039355 dumpster
dumpster's picture

clue less in america.

 

china will be the first with a gold backed currency

the euro will follow

gold will be purchased by nations states , large hedge funds retirement money , at 1500 at 2250 and higher

those who think gold has no place in international trade are walking dead midgets

it is coming closer than many know . and think ... clarify most do not think lol

so stand by get loaded up with paper , and watch a life time of work go down the drain.

or listen to the sound of the hollow men ,, we are the hollow men  brains made of straw

 

Thu, 03/10/2011 - 23:42 | 1039359 Math Man
Math Man's picture

Interestingly enough, the 200 tons of Gold imported in the first 2 months accounts for $9 billion of China's $7.3 billion dollar trade deficit...  hmmmm.

Thu, 03/10/2011 - 23:57 | 1039398 dkz
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zerohedge is to gold/silver as cnbc is to stocks.

 

Fri, 03/11/2011 - 01:07 | 1039587 rich_wicks
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I'd agree if CNBC actually gave good advice about buying stocks, but it doesn't.

You do what you like - nobody cares if you think the US currency has some sort of actual value.  Bernanke is telling you exactly what he's doing, and then lying through his teeth about what the result of his actions are.

Dollars are a commodity, and creating a lot of them, will make them less valuable.  He's increasing supply.  A child can see it will devalue the dollar, and if you don't realize that, well, a fool and his money deserve to be parted.

Fri, 03/11/2011 - 02:15 | 1039739 AldoHux_IV
AldoHux_IV's picture

Inflation targeting = social class genocide.  The more you target inflation which its effects are very relative in nature, the more you harm one class of people versus another.  Inflation targeting is just elitist jargon for economic genocide.

Fri, 03/11/2011 - 07:05 | 1039959 Snidley Whipsnae
Snidley Whipsnae's picture

"Inflation targeting = social class genocide"

Yes, but it's worse than that. Inflation targeting sends a message that saving is a losing proposition and savings are the excess earnings that make borrowing for economic expansion possible...at least, in a real capatialistic economy.

What we have now is a command economy solely directed by the Fed and other central banks.

Only a free market can determine what interest rates and inflation/deflation should be. Until we have a free market again physical PMs are the only investments that cannot be jerked out from under one. Who wants counter party risk when the counter parties are the central banks and Fed?

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