Daily Archives: February 1, 2017

Gold Or Gilts – The Chinese Conundrum

The Chinese have always been known as very astute investors. Observe the massive success of Singapore, Hong Hong and Malaysia (economically driven largely by its 30% Chinese population), and the emerging mainland China today, to see why China-watching, particularly the investment activities of the emerging middle class, can be very worthwhile, and potentially extremely profitable.

China has become an economic powerhouse and its people are becoming economically independent. The successful Chinese are now free to exercise their own choices on where to invest their new-found wealth. Watch carefully. The investment activities of the new wealth-driven class are likely to be the pointers to the primary sentiments in the markets. Right now the focus is on gold and gold stocks. As the fear of global recession deepens, the Chinese are running to gold as a safe haven in, what are expected to be, difficult times.

The Chinese people are taking the lead from their government, which has increased its gold reserves by over 450 tons since 2003 and is undoubtedly anxious to get the balance right between gold and gilts, which has become the Chinese conundrum. They now own significantly in excess of 1000 tons. In today’s prices that is over $ 30,000,000.000 in value(or 30 billion dollars). They are the fifth largest holder of gold and likely to overtake the larger holders as they continue to consolidate their position. While other central banks have been dis-investing themselves of gold, China has been taking advantage of the opportunity to increase its holdings.

There has been speculation that the proposed sale of gold by the IMF to raise funds to cover their shortfall, may be used by China as a chance to increase its own holding still further. There was some concern that this move could depress the price of gold, but a significant price reduction now seems unlikely. Any effect is likely to be temporary.

China is now the world’s largest gold producer, overtaking South Africa in 2007, and the second largest purchaser of gold jewelery after India. China’s history of gold production is claimed to date back 3000 years, and the Zhou Yuan mine in Shandong province, which is still operating, has produced gold for over 1000 years.

China is holding in excess of $ 1 trillion (1000 times their current gold reserves in value). How will they preserve the value of their dollar reserves by buying Gold or gilts: the Chinese Conundrum. The US Treasury Secretary recently suffered the ignominy of embarrassed laughter from Chinese students in response to his claim that the US dollar was safe. They know that such a claim is unlikely to be correct while the US continues to flood the market with new money. It definitely makes sense to preserve the wealth of China by buying gold rather than the ‘gilts’ on offer by the US Treasury.

If you’re interested in learning more about the most profitable ways of investing in gold and silver, take a leaf out of the Chinese book. Take a look at our free Gold Report at http://www.gold-and-silver-report.com

Until recently Gold has not been an area the average investor would consider, but the overwhelming economic forces in the world today are changing that. Suddenly there are so many opportunities out there to profit from precious metals. Gold enthusiast, Anna P. Best is keen to share her knowledge with other enthusiasts and help gold novices understand enough about the precious metal to become gold enthusiasts themselves. Anna has prepared a complimentary report packed with facts which you can download at http://www.gold-and-silver-secrets.com