Friday, November 10, 2006


Gold Finishes Week With Rally Intact

Bloomberg reports on the markets. "Gold in New York fell from a two-month high on skepticism China will buy the precious metal to diversify its foreign-currency reserves. China, which has about 1 percent of its reserves in gold, said the country will maintain a policy of reducing holdings of U.S. assets. Gold, sold in dollars, generally moves in the opposite direction of the dollar."

"'People are skeptical,' said Leonard Kaplan, president of Prospector Asset Management. 'China is not going to buy precious metals for their reserves.'"

"Gold futures for December delivery dropped $2.10, or 0.3 percent, to $634.70 an ounce at 9 a.m. on the Comex division of the New York Mercantile Exchange. Prices jumped 3 percent yesterday to the highest since Sept. 6. The metal was poised for the fifth straight weekly gain. It has climbed 0.9 percent this week."

From Reuters. "China will diversify its $1 trillion foreign exchange reserves, the largest in the world, across different currencies and investment instruments, including in emerging markets, Chinese central bank governor Zhou Xiaochuan said on Friday."

"His remarks sent the dollar tumbling for a second day and fuelled a growing debate about how China should best use its fast-growing reserves, which are about 70 percent in U.S. debt securities, bankers estimate. The U.S. dollar to hit a 2-1/2 month low against the euro."

"Asked about selling U.S. dollars, he said: 'We do not have any new preparations for selling any currencies.' He said gold sales were not under consideration."

"'China now faces a dilemma. It either keeps the exchange rate stable or sacrifices sound economic growth,' Dou Erxiang, a researcher at Peking University, told the official newspaper Financial News."

The "The modest pullback (in Gold) doesn't break the recent uptrend, which has seen spot prices rally from under $580 an ounce in mid-September. 'It's making higher highs and higher lows, which is a positive sequence,' says Rich Ishida, president of Pasadena, Calif.-based Market Vane. He notes a rise in the bullish consensus for gold to 66% bullish, up from 62% Wednesday, according to Market Vane."

"Ishida identifies $650 an ounce as the next price target, with technical support at around $610."

How odd that markets sit at the feet of Chinese officials while they decide what fate awaits the US dollar. The US is looking less like a super-power every day.
If China ever makes good on their threat, I'll sponsor the first Money & Metals party. One Eagle oughtta cover it! ;-)
People often talk about the Hunt Brothers' attempt to corner the silver market in 1980. China could do this easily by just spending the spare change they dig out of the crevices of their living room couch. This is also true of the numerous firms that routinely throw around billions of dollars. A small fraction of that spent on obtaining physical PMs would cause the price to skyrocket.
Jim, I wonder that myself...You wonder if there is the unspoken rule that noone starts a PM bull run. You have to think though that the major insiders have to have their fingers in the game as the market is so small ,and easily manipulated...Perhaps thein is my answer.
Jim, BBC... that is EXACTLY why the next bubble will be in PMs (and why prices will go through the stratosphere).
I think I read somewhere(which I look for) that gold is worth, with all the money created, $36,000 an ounce!

it's wouldn't take that much money to buy up all the physical gold in the world and the gold stocks.

there is so much potential for money to pour into metals and other commodites.

you sort of get the sense that the CBs are like shoppers looking at a display of the newest hot christmas toys. everyone in wants to just jump at the new toys, but they seem just to wait until someone makes their move.
"there is the inflation that started with banking in general, and accelerated in 1913 with the creation of the Federal Reserve. This is the inflation we see in total accumulated M3, the measure of money in the banks, which exceeds $10 trillion now, which, if you divide by the gold held by the U.S., shows that the gold price can exceed $38,000/oz."
Like I said, one Eagle oughtta cover it!

That'll be one hell of a party, won't it?
Maybe just a silver eagle.
Hey, if he's paying I want to order the filet ,and the good scotch.
ben, do we have a final answer as to whether china is going to by gold?

I can't see them doing that without stampeding the market. They have too much in reserve. I did hear that they are buying up vast amounts of commodities, like steel.
I envision back alleys, suitcases of dollars and people loading gold bars into their trunk.


do you think they could do it in the open market but in small quantities? GLD and IAU put billions into the gold market. do you think china could do that?

I think the best bet is that china would buy oil, no?
steel is a possibility.

we all know what they are collecting though. they are collecting a manufacturing economy.
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