Chinese Gold Demand Stuns London & Hong Kong Trade
Chinese Gold Demand Stuns London & Hong Kong Traders
KWN has reported on this for months,“Precious metals traders in London and Hong Kong said on Wednesday theywere stunned by the strength of Chinese buying in the past month. ‘Thedemand is unbelievable. The size of the orders is enormous,’ said onesenior banker, who estimated that China had imported about 200 tonnes inthree months.” That quote was from the Financial Times. King World News today interviewed Dan Norcini to get his take on this situation.
When asked about Chinese demand Norcini stated,“Yoursources have been reporting for months that demand from Asia,particularly China has been staggering, especially as the market hasmoved lower. This FT story has simply confirmed what King World Newshas been reporting for months, and that your sources have been accurate.
It’sapparent to me that there has been a very large buyer in the goldmarket, particularly on moves down towards the low $1,300’s on gold. Itis obvious now that China has in fact had an insatiable appetite forgold. This explains why we have had such a huge drop in open interestin the gold market, while gold has only fallen a mere 6%.
Openinterest has fallen almost 30%, but as I said gold has only dropped 6%.Normally if you are a short in a market and you start to have an assetcorrect because of significant liquidation, you will see a precipitousdrop in price. Given the sheer volume of contracts that has beenliquidated, we should have seen a massive correction in gold. Insteadit has stayed incredibly strong. You can see the footprints of theChinese buyers, it is becoming very obvious to all of the players in thegold market, and this is causing the shorts to have to coverprematurely.
Ithink the key here Eric is that inflation is roaring out of control inAsia, particularly in China. While the western monetary authorities aredoing their best to convince their citizens that inflation is not aserious problem, the reality is quite different. To quote Bernanke,‘Fear of inflation is overstated.’ The citizens of Asia and otherregions are not impressed with such statements. Those people have beenbuying gold and they will continue buying gold as long as inflation isalive and well and I see no end to that in the foreseeable future.”
As Dan Norcini said, KingWorld News has reported on the massive Asian buying, particularly fromChina for many months. Norcini knows these markets well, having tradedthem for over two decades. He is now making note that there has been asignificant change in the trading pattern of both the gold and silvermarkets.
Eric King
KingWorldNews.com