The South China Morning Post has reported a sharp drop by 42% in gold purchases coming from China. This is typical as we held into the lows. The idea that they will just keep buying as prices fall is wishful thinking. China should relax its demand as prices decline. Link below. http://www.scmp.com/business/commodities/article/1393461/chinas-gold-imports-drop-42pc
Happy New Year OC. From what I'm hearing supply is not the problem. 2014 is going to be very interesting that I can guarantee you.
"supply is not the problem" I am having LOTS of trouble finding 1/4 oz gold coins. Maybe it is all them greedy Chinese! Agree about 2014, I am damned if i can see them staggering through another year unscathed. OC
Actually, that's net gold imports from Hong Kong falling. The Chinese are liberalizing their import restrictions and some of the gold that was previously coming from Switzerland via Hong Kong is now going straight from Switzerland to Shanghai. Withdrawals from the Shanghai Gold Exchange are now pretty close to equaling world mining output. It doesn't seem likely we'll see Chinese buying letting up.
I don't understand that statement. Why does demand fall because prices drop? Standard economic theory suggests the opposite; prices might fall because demand does. With respect to China's buying, there are a couple of unknowables that mean you can't equate price movement with Chinese purchases directly: firstly, we don't know the domestic output of Chinese mines - they export virtually zero, so if their production has gone up, importing can fall and still maintain consumption. Secondly, we don't know the politics of it all. Perhaps the Chinese are agreeing to slow production as supplies dry up? Remember, both 'sides' benefit from a low gold price, albeit for different reasons. If the Chinese aren't ready for the price to rise, they don't want to completely deplete COMEX and LBMA supplies and break the link with paper. But I wholeheartedly agree: 2014 will be interesting. I'm sure I'll be glad I started buying in 2013 though, come what may. JB3
Think about this, you have a wad of cash,you see gold continually dropping week by week you say to yourself why buy now when it will be cheaper next week ,next week comes,gold still dropping "Oh I'll buy next week" and so forth. So demand and prices drop.
Oh, I see what you mean. Yes, in that sense price deflation reduces demand *today*. But it doesn't reduce overall demand, I'd posit: it just delays it. Anyway, I do see what you mean now.
The same theory applies with real estate as well. At the moment it is ..."we had better buy now because every year prices have gone up so next year they will be more expensive"..........but it can also go the other way..." I am not going to buy because it has fallen every year so next year will be cheaper.." It is a good sign as it is another sign of the beginning of the end of the mid-bear cycle...
It will have to go down after a while. I am seeing more bearish signs for gold and bullish signs for the dollar: *France back in recession, which means eurozone is in deeper trouble - the US dollar will gain from this (http://www.telegraph.co.uk/finance/...ng-back-into-recession-as-Spain-picks-up.html) *China not buying much gold now >> lower gold prices *Fed tapering >> stronger dollar, lower gold prices *OPEC might actually increase oil production in 2014, fuel costs will be lower >> will give a bearish drag to gold this year (http://www.truckinginfo.com/channel...d-oil-costs-forecast-to-be-lower-in-2014.aspx) ...and there are others I suppose China will have to slow down buying gold after a while. Suppose the West won't buy much gold by then and China will be holding it, not selling. No circulation could mean deflation? Lower gold prices? I suppose gold's price increases until gold circulates, until demand is high enough or, if they back some currency with it. This was the holiday period, Chinese bought up lots of gold (the population), so I guess they are slowing down a bit right now. We'll have to wait and see what'll happen around the Chinese New Year.
