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China announces they are buying 80B in gold! That's 2 Fort knox's!
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<p>[QUOTE="Morgan1878, post: 618132, member: 17869"]Based on an analysis by the world's largest Swiss bank, it's likely that China won't buy that much gold..for this reason: </p><p> </p><p>To have 10% of its assets in gold, China would have to buy the equivalent of two years of the total world production of gold. Doing this would drive the price of gold up, but it would depress the value of the dollar holdings that China has. In other words, they would be depreciating the value of their total holdings by converting too many dollars too fast. In the stock market, this is called "bidding against yourself".</p><p> </p><p>It's more likely that China will convert and re-allocate dollar holdings slowly into other currencies and commodities (including gold) to soften the effect on the value of the dollar-denominated holdings they own.</p><p> </p><p>I know the gold bugs on the forum are looking for the big & fast spike upwards in the price of gold, but be aware that any big move has negative implications for most of the central banks and they will do their best to avoid these sudden jolts. </p><p> </p><p>I think the price of gold & silver will continue to rise, but slowly and in an orderly way that will not cause alarms to go off.[/QUOTE]</p><p><br /></p>
[QUOTE="Morgan1878, post: 618132, member: 17869"]Based on an analysis by the world's largest Swiss bank, it's likely that China won't buy that much gold..for this reason: To have 10% of its assets in gold, China would have to buy the equivalent of two years of the total world production of gold. Doing this would drive the price of gold up, but it would depress the value of the dollar holdings that China has. In other words, they would be depreciating the value of their total holdings by converting too many dollars too fast. In the stock market, this is called "bidding against yourself". It's more likely that China will convert and re-allocate dollar holdings slowly into other currencies and commodities (including gold) to soften the effect on the value of the dollar-denominated holdings they own. I know the gold bugs on the forum are looking for the big & fast spike upwards in the price of gold, but be aware that any big move has negative implications for most of the central banks and they will do their best to avoid these sudden jolts. I think the price of gold & silver will continue to rise, but slowly and in an orderly way that will not cause alarms to go off.[/QUOTE]
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China announces they are buying 80B in gold! That's 2 Fort knox's!
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