An article in www.eastmoney.com and translated into English
the reasons for holding gold: China's GDP rose gold demand will follow up
www.eastmoney.com 2013 02 22 10:43
Last week the price of gold fell below $ 1,600, fell to the lowest since 6 months, so investors felt chagrined. I found gold the specific correction period, which is held on the weekend of the G20 meeting. Reuters said more and more people to discuss the yen devaluation to stimulate economic growth issue, the G7 leaders pointed out that domestic economic policy should never reach the monetary goal.
G7 try to make the currency devaluation of legalization, in reality, investors seem to see through the real motive behind this move.
The main reason is that the mainstream media refers to the end of last year, hedge gold selling gold entered a correction phase. According to the quarterly report records, the hedge fund manager George Soros in the fourth quarter of 2012, selling half the hands of gold held by the ETF . Bloomberg said the selling gold may drive the gold bull market up to 12 years to an end. However, Soros found significant short-term investment opportunities in the money market, that is why he sell the hands of gold held by ETF.
I have repeatedly mentioned that the Government's policy is a pioneer in promoting change. The end of last year, the new Japanese Prime Minister Shinzo Abe clearly intented that the depreciation of the yen, thus promoting the economy, inflation intensified. Weaker yen after Japan's policy change, to promote gold yen as the unit prices.
Look at the gold return units in different currencies. The following chart compares the past six months and change of the gold yen and the percentage of gold in U.S. dollars. From August 2012 to November, two currency units similar to the gold trend.
However, due to changes in government policies, the price of gold in yen terms over the past six months rose nearly 19%, only 1% less than the dollar-denominated gold prices.
Soros expected that the Japanese government's policy will affect the flow rate of the currency and made an extremely successful investment decision. The Wall Street Journal reported in the the yen investment increased the past three months, as Wall Street's most popular investment projects. Newspapers reported in yen for the fourth consecutive month, a drop of nearly 20% and Soros earned close to $ 1 billion transactions since November.
I appreciate Soros's insight the impact of government policies on the market, More important is that he has to act quickly in the event.
Soros is not the first victory in the foreign exchange market. In 1992, the British government policy changes, Soros sold off pounds and bought in DEM , his fund earned $ 1.8 billion.
Government policy can significantly change the flow of money. Global investors need to pay attention to these trends closely to make decision of investment in commodities or stock market, looking for new opportunities and adjust the investment risk.
Friday, I discussed with CNBC's Simon Hobbs the Soros investment potential motive. I explained that the gold correction in the extreme, and apparently is a potential market opportunities.
Back in June 2012, I said on CNBC gold has reached a very low point, but is rose close to 10% in the next few months . it is more important that gold is increasingly regarded as currency. Global central banks are buying gold instead of buying real estate ( market area ) , timber or diamonds. According to the World Gold Council, the central bank the total demand for gold in 2012 reached 534 tons, nearly 50 years have not seen up to this level.
The increase in emerging market central banks to buy gold reserves, including Mexico, Brazil, the Philippines, South Korea and Russia. The World Gold Council said Russia accumulated 958 tons of gold held in the past 10 years, become a global central banks to up gold reserves ranked eighth. In addition, gold has long been used to express their love of family and friends. You can see following figure shows jewelery demand decreased slightly by 3% in 2012, more than half of the demand from countries tend to buy gold, such as India and China. Countries to impose import duty and the rupee weakening India's gold purchases fell by 12%. However, the domestic gold price in rupee terms rose significantly, India's demand is still significant.
India gold demand in the fourth quarter, better than expected, continue to be the world's largest gold demand in the country.
The Chinese increased demand will support gold prices
China slowdown in the first half of the year Domestic Product the gross ( GDP ) this year , so that the gold under pressure. World Gold Council pointed out that this year's gold demand rose slightly compared to last year. The World Gold Council expects gold with the stock market are stronger in 2013 , forecast to rise 10-15%. I believe that China's GDP to rise, the demand for gold will also be followed up.
SLR Price at posting:
$2.28 Sentiment: Hold Disclosure: Not Held
