As US drops safe haven status for gold, China increases their gold purchases 40-fold, benefiting from price drops.
Gold no longer a safe haven asset?
I’m going to make this short and sweet, even though I get quite a few emails from friends and readers who took my precious metal advice and are now getting cold feet because there are some boom corrections taking place. Me, I’m just surprised to learn how easily people of superb intelligence still get spooked by main stream talking heads without a clue. CNBC actually went as far as to say that gold was no longer a safe haven asset, while news pundits are buying into the story that all at once the economy is looking much better, yet no one seems to question what supposedly brought about the economic turn around, other than it’s Holly, Jolly Christmas in the Land.
Has the dollar strengthened recently or is our currency just looking a bit better than the Euro or the Yen? So answer the question if the current support for the US dollar is an honest indication of its health? Are the sovereign debt problems in Europe magically solved and are our banks safe from a huge hit on the chin? Have we gotten any clarity on how the US will repay its $15 trillion debt load without some level of currency dilution? Is there likely to be more money printing in the future, or less? Are real interest rates positive yet? And then ask yourself: “Has gold really lost its safe haven status as a result of one, or a couple bad weeks?”
Obviously China doesn’t think so, as they keep on buying and importing gold through Hong Kong; no less than 85.7 tonnes in October, 40 times more than just a year ago. They will love to see gold’s purchasing price go down because of panic on this side of the pond.
And when you’re done contemplating all the above you should ask yourself: What is the mainstream media’s track record on forecasting precious metals prices or anything economy and finance for that matter?
So my answer is simple: consider the precious metal price drop (correction) a welcome (re-)entrance into the precious metals market and definitely not an exit.
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Right on. That is why it is referred to as “precious” metals and not the precious euro, yen or dollar. It is absolutely amazing just how easy it is to move the masses with just a word or two on the evening news. Wise investors, (and they are few in number) have always known gold is a good investment. China is indeed taking advantage of a slight down turn and praying for deeper cuts. Who knows “sheeple” here may soon be mailing their gold to China for the best price. And the beat goes on…..