Contrary to much speculation China may not buy the International Monetary Fund's (IMF) remaining 191.3 tons of gold which is up for sale as it does not want to upset the market, a top industry official told China Daily yesterday.I still think that gold is not a place to be, because everyone is talking about how it is the place to be, which reminds me of dotcoms in 1999 and housing in 2006.
"It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility," said the official from the China Gold Association, on condition of anonymity.
Wednesday, February 24, 2010
More Bad News For the Gold Bugs
China is sending signals that they will not be buying gold that the IMF is selling:
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Good afternoon Matthew;
ReplyDeleteThat is an interesting article, leading me to speculate that there is an effort afoot to try and "fix" the unexpected purchase of the first 200 tons sold by the IMF in this latest 400 ton offering. The contradictions within the article (thinking that China should almost double its gold reserves from 1,000 tons to 1,800 tons) and discussion that they will not be buyers for the offered 191 tons raises questions.
At this time, all gold production from China's local mines is required to be sold to the government, none is allowed to be exported. Acquisition of foreign mines in order to increase Chinas reserves is typical of the positions China has been taking with regard to most comodities, rare earths ESPECIALY, a comodity far more important than gold.
I suspect a ploy to attempt to get the world to lower the spot price of gold/silver in dollar terms is under way again. I do suspect it will not be very effective this time. If you look at the excuses given for China not buying, they don't hold water. Volatility has been the norm in the precious metals markets for years now, and I do not believe that there is any true concern to try and promote stability in that market. Again, I believe it is a weak attempt to lower the price. We will see what India does.