Post by jeffolie on Oct 17, 2012 13:12:39 GMT -6
Slow China slows Gold?
The metals market might reflect a slowing demand for gold imports from China or not. The market might have already factored in the China slow down and reflected this anticipation of a slowing China in its current market price.
The relationship of fear, currency confidence and currency price can drive metals prices. As I look at the Dollar compared to the Euro and the basket called the Dollar Index this morning, I observe the gains of the Euro and the decline of the Dollar often associated with metals prices rising ... the contrary, inverse, opposite movement of the Dollar and metals usually but not always works.
China's impact on metals trading at this moment appears null compared to the movement of the declining Dollar this morning.
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China cooling may seal gold’s demise
October 17, 2012
China’s slowing economy could have grave consequences for the gold price.
CLSA strategist Russell Napier calculates that China is the most important factor globally in terms of money creation, responsible for 40% “of everything created since 2007.”
Now that its economy is slowing sharply, all that is changing, according to Napier. Read story on how China’s falling gold imports hint at rally’s end.
Third-quarter quarterly gross domestic product growth data due out 10 a.m. in Beijing on Thursday is expected to show growth eased to 7.4% from a year earlier, down from 7.6% in the prior quarter, according to estimates by French bank Societe Generale.
“With China so important in creating money, and money supply growth in the developed world still flat on its back, a slowdown in China augurs for lower inflation — perhaps deflation — and higher real rates,” Napier told Marketwatch in an email Wednesday.
Since the Bretton Wood system was dissolved in 1971, allowing the gold’s value to be determined in the open market, prices have tended to do well when real rates of interest have been low, and poorly when they’ve been high, Napier said.
Napier wrote in his email: “With nominal rates close to zero, the market would be fearful about monetary policy responses — bad for gold.”
blogs.marketwatch.com/thetell/2012/10/17/china-cooling-may-seal-golds-demise/
The metals market might reflect a slowing demand for gold imports from China or not. The market might have already factored in the China slow down and reflected this anticipation of a slowing China in its current market price.
The relationship of fear, currency confidence and currency price can drive metals prices. As I look at the Dollar compared to the Euro and the basket called the Dollar Index this morning, I observe the gains of the Euro and the decline of the Dollar often associated with metals prices rising ... the contrary, inverse, opposite movement of the Dollar and metals usually but not always works.
China's impact on metals trading at this moment appears null compared to the movement of the declining Dollar this morning.
======================================
China cooling may seal gold’s demise
October 17, 2012
China’s slowing economy could have grave consequences for the gold price.
CLSA strategist Russell Napier calculates that China is the most important factor globally in terms of money creation, responsible for 40% “of everything created since 2007.”
Now that its economy is slowing sharply, all that is changing, according to Napier. Read story on how China’s falling gold imports hint at rally’s end.
Third-quarter quarterly gross domestic product growth data due out 10 a.m. in Beijing on Thursday is expected to show growth eased to 7.4% from a year earlier, down from 7.6% in the prior quarter, according to estimates by French bank Societe Generale.
“With China so important in creating money, and money supply growth in the developed world still flat on its back, a slowdown in China augurs for lower inflation — perhaps deflation — and higher real rates,” Napier told Marketwatch in an email Wednesday.
Since the Bretton Wood system was dissolved in 1971, allowing the gold’s value to be determined in the open market, prices have tended to do well when real rates of interest have been low, and poorly when they’ve been high, Napier said.
Napier wrote in his email: “With nominal rates close to zero, the market would be fearful about monetary policy responses — bad for gold.”
blogs.marketwatch.com/thetell/2012/10/17/china-cooling-may-seal-golds-demise/