Category Archives: precious metals

Gold demand from China

In Beijing, the value of pure gold has surpassed 430 yuan per gram, but consumer eagerness is just as immense as gold prices move higher. Two months to go to celebrate the Chinese traditional lunar Year of the Dragon. Chinese people have cultural and historical demand for gold and silver, as both jewelry and status. The peak season for gold sales this year coincides with the New Year holiday and the Chinese Spring Festival.

Chinese investors have rushed to buy precious metals to hedge against rising inflation, where the Consumer Price Index (CPI) shot up to 5.5 % year-on-year in October, showing the world’s second largest economy is suffering the fastest growing price in almost three years.

The benchmark interest rate of one-year deposits still stood at 3.25 % after the central bank raised the interest rate twice this year to curb inflation. Analysts say the continuous decline of the U.S. dollar and Euro has stimulated investors to choose safe haven products such as gold.

Buying gold as means of investment has become more a common choice for Chinese in the past third quarter as it is viewed as a safe investment during these uncertain economic times, said the World Gold Council (WGC) in its Gold Demand Trends report for the third quarter of 2011.

Gold gone Wild

Right now gold is hovering near $1,800 per oz even after the CME announcement hiking gold margins by 22%. I like gold but I wouldn’t be injecting fresh capital at these price levels especially after gold’s parabolic surge the past few weeks. Late spring of this year the CME raised margin requirements on silver 4 times  over a period of a week and silver violently crashed to the downside in a blink of an eye. Silver still hasn’t recovered its 2011 price high after the early summer tank job and is struggling to keep up with gold’s up move the past week due to its industrial application in a sluggish global economy. If gold continues to rise from this point there’s a likely possibility of the CME stepping in again to raise margin requirements to slow down gold’s upward momentum. I’d like to see a nice pull back before acquiring more of this yellowish lustrous chemical element.

Silver Streaker 银裸奔

On March 11, 2011 silver for April delivery finished up 2.49%, or 87 cents, at $35.93 per troy ounce. The white metal has been super nova hot since turning the corner near the end of January and hasn’t reached this price level since March 1980, when the Hunt Brothers of Texas famously tried to corner the silver market.

Precious metals shot higher on reports of civil chaos in Libya, one of the top 10 members of the Organization of the Petroleum Exporting Countries. Economic concerns in Europe and the devaluation of the U.S. dollar has added jet fuel to silver’s vertical move.

The earthquake and tsunami that hit Japan has dealt a major blow to the country’s treading economy. The Japanese government has publicly announced they will do what it takes to get their economy moving in the right direction which means added liquidity into the system.

A report released today by the International Monetary Fund claims that Japan’s government debt will reach 250% of GDP in 2015. The situation in the United States and PIIGS countries in the European Union are in a similar predicament. Staggering numbers of debt to GDP in the developed world is astoundingly remarkable.

Trading silver futures is extremely volatile and dangerous for most everyone but if one would be interested in participating in silver price movement via the equity markets, a couple of ETF’s are available to track silver. iShares Silver Trust (SLV) and ProShares Ultra Silver (AGQ). AGQ is theorectically double leverage so be careful.

*** Buyer Beware. Silver may not be appropriate for you. ***