Finansiella Insikter

För er som missade det i helgen så rekommenderar jag att läsa vad The Telegraphs Ambrose Evans-Pritchard hade att säga om chanserna att Kina riskerar uppleva sin alldeles egna ‘subprime’ bubbla.

Här är ett utdrag:

Monetary tightening in China threatens to pop the $1.7 trillion (£1.07 trillion) credit bubble in local government finance and expose the country’s simmering “subprime” crisis, according to the Communist Party’s economic guru.

Kanske är detta utspel en bricka i det valutakrig som vi just nu bevittnar. Som Jim Rickards talade om nyligen så vill Kina för allt i världen inte se en förstärkning mot euron utöver den senaste tidens förstärkning mot dollarn.

De amerikanska börserna raderade ut dagens tidigare ras och steg på uppgifter från Financial Times om att Italien har varit på en tiggarturné i Peking för att få Kina att köpa deras snart värdelösa statspapper.

Vakna läsare kommer sannolikt ihåg att Kina agerade ‘räddare’ av Grekland genom att köpa landets statspapper, där den ettåriga räntan nu närmar sig skrattretande 100%. Skall därför bli mycket intressant att se hur länge denna ‘räddningsaktion’ kommer att hålla Italien flytande.

Här är ett utdrag från FT:

ZeroHedge påminner oss samtidigt om mad Tremonti hade att säga om Kina som finansiär för drygt en månad sedan (via Reuters):

Italian Economy Minister Giulio Tremonti said on Thursday that Asian investors are reluctant to buy Italian bonds because it sees they are not being bought by the European Central Bank.

When you talk to Asia they say: “We don’t understand what Europe is,” he continued. “The second point is that they say ‘if your central bank doesn’t buy your bonds, why should we buy them”?

Man bara skakar på huvudet.

Det verkar som om kreditvärderingsinstituten helt plötsligt börjat vakna till liv och nu är pigga på att försöka ta igen det förtroende man förlorat genom att se genom fingrarna i åratal. Efter att ha gått igenom de kommunala räkenskaperna tycks Moodys ha funnit osäkra fordringar som motsvarar hela 10% av landets BNP.

Med tanke på att många hoppas på att Kina kommer vara den stora räddaren av Europa är detta givetvis ingen välkommen utveckling. Den kommande finansiella tsunamin är ytterligare ett steg närmare.

Här är ett utdrag från ZeroHedge:

In a report just released, the rating agency not only warns that China’s debt problem is “bigger than stated” (i.e., China is hiding a ton of ugly stuff off the books), but goes ahead to quantify it: “Of the RMB 10.7 trillion (about $1.6 trillion) of local government debt examined by the Chinese audit agency, RMB 8.5 trillion ($1.3 trillion) was funded by banks. However, Moody’s has identified another potential RMB 3.5 trillion ($540 billion) of such loans that the Chinese auditors did not discuss in their report….we find that the Chinese audit agency could be understating banks’ exposures to local governments by as much as RMB 3.5 trillion.” Naturally, the implication is that this is an absolutely willing “omission” (thank you central planning), which means that of China’s $5.8 trillion GDP (or whatever imaginary number the Polit Bureau is happy with throwing around for mass consumption), $540 billion is debt that is “unaccounted for”, most likely due to being, well, bad. That would be equivalent to saying that $1.4 trillion of US corporate debt is delinquent. And lest anything is lost in translation, Moody’s drives the steak through the Dragon’s heart: “Since these loans to local governments are not covered by the NAO report, this means they are not considered by the audit agency as real claims on local governments. This indicates that these loans are most likely poorly documented and may pose the greatest risk of delinquency.” So let’s get this straight: a country which has 10% of its GDP in the form of bad debt, is somehow expected to be credible enough to buy not only Greek debt, but the EURUSD each and every day?

Först var det Feri som sänkte USAs kreditbetyg och nu följer Kinas kreditvärderingsinstitut Dagong upp sin egna sänkning från november förra året med att påpeka att USA i praktiken redan genomför en default på sin enorma statsskuld då den låter dollarn falla kraftigt mot andra valutor.

Som vi påpekat så många gånger tidigare så kommer de ‘riktiga’ (läs korrupta) kreditvärderingsinstituten inte att säga sanningen förrän det är på tok för sent. Både Feri och Dagong inser självklart att deras sänkta betyg för USA är på tok för generösa men att sänka ytterligare i detta läge inte är aktuellt då världen ännu inte är redo för höra mer av sanningen.

Här är en artikel från AFP:

China ratings house says US defaulting

BEIJING — A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

“In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said.

Guan did not immediately respond to AFP requests for comment.

The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond $14.29 trillion — but Republicans are refusing to support such a move until a deficit cutting deal is reached.

Ratings agency Fitch on Wednesday joined Moody’s and Standard & Poor’s to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans.

A downgrade could sharply raise US borrowing costs, worsening the country’s already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments.

China is by far the top holder of US debt and has in the past raised worries that the massive US stimulus effort launched to revive the economy would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings.

Beijing cut its holdings of US Treasury securities for the fifth month in a row to $1.145 trillion in March, down $9.2 billion from February and 2.6 percent less than October’s peak of $1.175 trillion, US data showed last month.

Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt “effective measures to improve its fiscal situation”.

Dagong has made a name for itself by hitting out at its three Western rivals, saying they caused the financial crisis by failing to properly disclose risk.

The Chinese agency, which is trying to build an international profile, has given the United States and several other nations lower marks than they received from the the big three.

I förra veckan framkom det att Kina gått om Indien och nu är största köpare av guld.

Den kinesiska guldaptiten tycks bara fortsätta att öka. Nyligen framkom det att Comex får konkurrens från Hong Kong Mercentile Exchange och idag kommer nyheten om att Shanghai Gold Exchange planerar att utmana bl a GLD genom att introducera guld ETF:er. Bara glöm allt snack om att guld är en bubbla.

Som om det inte redan stod tillräckligt illa till för den amerikanska dollarn så meddelade Kina på torsdagen att man tar nästa steg för att etablera sin egen valuta som en av världens reservvalutor på bekostnad av dollarn. Ni kanske kommer ihåg att Kina de senaste året redan tagit ett par steg i denna riktning genom direkt handel mot euron, rubeln och snart rupeen.

Detta är en oerhört stor händelse, men nyheten verkar närmast ha mörkats av massmedia. Inte konstigt med tanke på de omfattande och allvarliga konsekvenserna för dollarn och därmed hela det finansiella systemet, som är så knutet till dollarn. Tror ni redan inser hur detta kommer att påverka priset på guld och silver. För de av er som inte redan gjort det rekommenderar jag att läsa intervjun med James Turk om dollarns framtid.

Här är mer information kring Kinas planer från ZeroHedge:

China “Attacks The Dollar” – Moves To Further Cement Renminbi Reserve Currency Status

In a surprising turn of events, today’s biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People’s Bank of China.

The statement, google translated as “Pragmatic and pioneering spirit to promote cross-border renminbi business cum on monitoring and analysis to a new level” is presented below:

Reuters provides a simple translation and summary of the announcement: “China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency’s international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily.” To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.

International Business Times provides further insight:

This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

Aside from the efforts of the Chinese government, fundamentals also point to the increasing international popularity of the Chinese currency.

China is already the leading trade partner with Australia and Japan. It’s also the leading or a large trade partner with many of its smaller neighbors. The purpose of having foreign currencies is to conduct foreign trade and investment, so the yuan is expected to become a more attractive currency for China’s trade partners, espeically as the government continues to relax restrictions.

The reason for this dramatic move may be found in what Stephen Roach wrote a few days ago inProject Syndicate:

In early March, China’s National People’s Congress will approve its 12th Five-Year Plan. This Plan is likely to go down in history as one of China’s boldest strategic initiatives.

In essence, it will change the character of China’s economic model – moving from the export- and investment-led structure of the past 30 years toward a pattern of growth that is driven increasingly by Chinese consumers. This shift will have profound implications for China, the rest of Asia, and the broader global economy.

Like the Fifth Five-Year Plan, which set the stage for the “reforms and opening up” of the late 1970’s, and the Ninth Five-Year Plan, which triggered the marketization of state-owned enterprises in the mid-1990’s, the upcoming Plan will force China to rethink the core value propositions of its economy. Premier Wen Jiabao laid the groundwork four years ago, when he first articulated the paradox of the “Four ‘Uns’” – an economy whose strength on the surface masked a structure that was increasingly “unstable, unbalanced, uncoordinated, and ultimately unsustainable.”

The Great Recession of 2008-2009 suggests that China can no longer afford to treat the Four Uns as theoretical conjecture. The post-crisis era is likely to be characterized by lasting aftershocks in the developed world – undermining the external demand upon which China has long relied. That leaves China’s government with little choice other than to turn to internal demand and tackle the Four Uns head on.

The 12th Five-Year Plan will do precisely that, focusing on major pro-consumption initiatives. China will begin to wean itself from the manufacturing model that has underpinned export- and investment-led growth. While the manufacturing approach served China well for 30 years, its dependence on capital-intensive, labor-saving productivity enhancement makes it incapable of absorbing the country’s massive labor surplus.

Instead, under the new Plan, China will adopt a more labor-intensive services model.It will, one hopes, provide a detailed blueprint for the development of large-scale transactions-intensive industries such as wholesale and retail trade, domestic transport and supply-chain logistics, health care, and leisure and hospitality.

Obviously, a reserve currency would be not only extremely useful, but quite critical in achieving the goal of China’s conversion to an inwardly focused, middle-class reliant society. And even that would not guarantee a smooth transition. However, should China really be on a path to a step function in its evolution, the shocks to the system will be massive. Roach puts this diplomatically as follows:

But there is a catch: in shifting to a more consumption-led dynamic, China will reduce its surplus saving and have less left over to fund the ongoing saving deficits of countries like the US. The possibility of such an asymmetrical global rebalancing – with China taking the lead and the developed world dragging its feet – could be the key unintended consequence of China’s 12th Five-Year Plan.

A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.

And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel “China Attacked the Dollar” (google translated):

The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars.Beijing shakes America’s claim to represent the key currency – with serious consequences for the U.S..

The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.

This will respond to the growing importance of the yuan as a global reserve currency.“The market demand for cross-border use of the yuan rises,” said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.

Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.

Currently, the People’s Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People’s Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur – and not on supply and demand-based exchange rate.

Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.

The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.

Reuters rapporterar att Industrial and Commercial Bank of China (ICBC), landets och världens största bank, ser en ‘explosiv’ efterfrågan på guld i landet. ICBC sålde 7 ton guld i januari i år, vilket var i nästan hälften av de 15 ton man sålde under hela 2010! Efterfrågan på silver är också rekordstor.

Denna nyhet kommer knappast som en överraskning för de som läste Eric Sprotts artikel ‘Guld Tsunami’ nyligen. För de som ännu inte läst den bör helt klart göra det.

Här är mer information från Reuters (via ZeroHedge):

Chinese Demand For Gold “Explosive”

According to an executive of Industrial and Commercial Bank of China, the world’s largest bank by market value, demand in China for physical gold and gold-related investments is growing at an “explosive” pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, reports Reuters. In other words, what was previously repeatedly reported on Zero Hedge, and by the World Gold Council, is starting to be appreciated by everyone else. Yet in a market in which supply and demand are completely disconnected from price discovery thanks to global central planning, and courtesy of precious metal price suppression by JPM, China investors are able to accumulate gold and other non-dilutable metals at prices that no longer reflect surging global demand. And just like in the US, China is also starting to fall for physical substitute investments: “There is also frantic demand for non-physical gold investments. We issued 1 billion yuan worth of gold-price-linked term deposits in 2010, but we managed to sell the same amount over just a few days in January this year,” Zhou said, adding that such deposits would easily exceed 5 billion yuan ($759 million) this year.” Although in China, unlike in London, these deposits may actually have real coverage behind them.

From Reuters:

ICBC, the world’s largest bank by market value, sold about 7 tonnes of physical gold in January this year, nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank’s precious metals department on Wednesday.

“We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation,” Zhou told Reuters.

Gold imports into China soared in 2010, turning the country, already the largest bullion miner, into a major overseas buyer for the first time.

The surge, which comes as Chinese investors look for insurance against rising inflation and currency appreciation, puts the country on track to overtake India as the world’s top gold consumer and a significant force in global gold prices.

Gold prices jumped 30 percent in 2010 and struck an all-time high of $1430.95. Spot silver surged 83 percent last year and is currently hovering at around $30 per ounce.

Zhou said China’s gold demand could grow at a stronger pace this year compared with 2010, as a choppy stock market and moves by Beijing to rein in property speculation and purchases means more investors will pile their cash in bullion investments.

“Unlike the property market, investment in the gold sector is something the government is encouraging,” he said.

Beijing has encouraged retail consumption and announced last August measures to promote and regulate the local gold market, including expanding the number of banks allowed to import bullion.

“China has a centuries-long cultural attraction to gold and because we have started at such a low base, I think demand growth will likely stay strong for quite some time,” he said.

Oh yes, silver too

Zhou said there was also voracious demand for silver, with the bank selling about 13 tonnes of physical silver in January alone, compared with 33 tonnes in the whole of 2010.

Not surprisingly, China is doing all it can to offload bubble frenzy to its billion plus consumers:

The bank on Tuesday launched its second physical gold investment product, which sells gold bars to investors, which can be resold for cash through ICBC based on real-time gold prices.

The WGC said ICBC’s introduction of this gold investment could lift China’s gold retail investment by 10 to 15 percent in 2011 from about 170 tonnes last year.

For those who think gold is already in a bubble… check back in 1 year.

För er som investerar i jordartsmetaller (eller oxider som det egentligen handlar om) kan säkert följande artikel från WSJ vara av intresse, där det framgår att Kina ytterligare stärker greppet om marknaden genom att bygga upp strategiska reserver.

I en annan artikel från AP nyligen framkom det dessutom att Kina förstatligat 11 gruvor, vilket ytterligare kommer att pressa upp priserna ytterligare.

Sammantaget lät detta lär inte göra det lättare för alla företag som suktar efter dessa oxider som i många fall är helt nödvändiga för att ens få produkterna att fungera. Inte undra på att gruvbolag verksamma inom denna sektor spås en så ljus framtid. Se investeringsportföljen för förslag på bolag att investera i.

Här är ett par intressanta urklipp från de båda artiklarna:

China Moves to Strengthen Grip Over Supply of Rare-Earth Metals

SHANGHAI—China is building strategic reserves in rare-earth metals, an effort that could give Beijing increased power to influence global prices and supplies in a sector it already dominates.

Details of the stockpiling plans haven’t been made public. But the outlines of the effort have emerged in recent statements from Chinese government agencies, state-controlled companies and reports in government-run media. The reports say storage facilities built in recent months in the Chinese province of Inner Mongolia can hold more than the 39,813 metric tons China exported last year.

The Chinese stockpiling, under the direction of the Ministry of Land and Resources, began with a pilot project almost a year ago in China’s primary mining region of Baotou in Inner Mongolia and is related to the ministry’s assertion of authority in recent years over mining regions. At least 10 storage facilities are being built and managed by the world’s largest producer of rare-earth metals, government-controlled Baotou Steel Rare-Earth (Group) Hi-Tech Co. Chinese state media reports say stockpiles may eventually top 100,000 metric tons.

In their limited comments about strategic reserves of rare-earth minerals, Chinese officials have cited the need to protect national resources, reduce pollution and save energy, the same factors used to explain China’s export quotas.

A 2009 policy paper on minerals by the Resources Ministry cited a need “to regulate the supply-demand relationship in the market and implement government industrial policy.”

It is unclear how much day-to-day control Beijing authorities actually have of their rare-earths industry. The Resources Ministry in policies dating to 1999 repeatedly has described rare-earth production as disorderly. Nor has the government spelled out what supplies will get diverted to national stockpiles.

But the ministry increasingly is asserting authority over rare-earth mining as part of a broader program that has seen the government move to manage more than 50 commodity-production zones producing coal, iron ore and vanadium. Eight rare-earth zones were put under national administration in 2006, while Beijing has specified that more than 1,600 mining blocs are subject to central-government planning policies and hundreds of mines will be closed.

The ministry extended its reach in January to include a region in southeastern Jiangxi Province where a particularly scarce class of rare-earth minerals is prevalent. That move, announced in a one-paragraph notice dated Jan. 4, covers 11 rare-earth mining blocks over a little more than half an acre in the Jiangxi area of Ganzhou. The area is known for deposits of particularly rare, premium-priced “heavy” rare-earth metals, such as terbium, which is used in fuel cells.

“The announcement is to promote an overall planning over the rare-earth mining industry,” said Chen Zhenheng, deputy director of the Chinese Society of Rare Earths industry association.

China brings 11 rare earth mines under state control

BEIJING (AFP) – China has brought 11 rare earth mines under state control as Beijing consolidates the industry — a move analysts said Thursday could drive up prices of the elements, used in mp3 players and hybrid cars.

Authorities have targeted mines in the eastern province of Jiangxi, which is rich in heavy rare earths, as it seeks to strengthen “protection and reasonable development” of the sector, the land and resources ministry said this week.

The ministry said Monday the 11 mines covering an area of 2,534 square kilometres (978 square miles) were the first batch of “state planned mining zones” for rare earths.

Analysts said the move to bring the mines under state control was a key step towards consolidating the fragmented industry in the south and would likely increase the cost of the elements.

“Prices will go up once (mining) concentration rises and the state strengthens control,” said Sang Yongliang, an analyst with Guotai Jun’an Securities in Shanghai.

Sang said the government may be targeting heavy rare earths, which are more expensive than the light elements because of their scarcity.

WOW är det enda jag kan få ur mig för att beskriva tisdagens utveckling för guld och silver. Framförallt silver började dagen starkt och klättrade till 29,70 dollar under förmiddagens handel bara för att tappa hela uppgången när Kina meddelade att man höjer räntan med 25 punkter. Jag tror knappast jag var ensam om att förvänta mig en negativ utveckling för guld och silver (och den bredare råvarumarknaden) under resten av dagen och kanske resten av veckan.

Men vad hände? Guld och silver vände plötsligt upp och såg ut att agera draglok för koppar och resten av den bredare råvarumarknaden som också vände upp. De som läste Eric Sprotts artikel ‘Guld Tsunami‘ vet att en räntehöjning från Kina inte kommer påverka den urstarka efterfrågan på guld och silver för fem öre. Marknaden hade länge förberett sig för en ny kinesisk räntehöjning och kanske kändes det till och med bra att få det överstökat.

Så här kommenterade Bill Murphy dagens utveckling:

As veteran traders know, there is nothing better than when the price of a commodity rises on negative news and nothing worse than when it falls for no reason, or on positive news. The fall bit we saw in January, was an artificial fall orchestrated by The Gold Cartel and allies. That fall cleaned out the spec longs who became disgusted with gold’s lousy performance and for just that reason. The bums received much less traction in silver as we all know.

However both precious metals became SOLD OUT from a technical perspective. Those who were going to sell exited the market. Thus, there were few sellers around to dump gold and silver on supposedly negative news this morning. There were buyers waiting in the wings for both gold and silver and when both failed to react negatively to the Chinese rate hike, many wanted in at the same time and the scramble was on.

Och här är en kommentar från Dan Norcini:

To see market action like this tells me that an inflation psychology is beginning to become more entrenched in the minds of global investors who are slowly coming to realize that the Central Banks are well behind the inflation curve. I think it is also safe to say, based on the price action across these various markets, that the deflation boogeyman is losing his allies.

Perhaps this is what has been foretold in the bond market’s breakdown of last Friday. Were it not for the continued meddling by the US monetary authorities in that bond market ( they euphemistically term it “Quantitative Easing ), I suspect that the bonds would have been sharply lower today as well. Inflation is raging across Asia and in many places in Latin America and it is just a matter of time before even the worst skeptic is going to be forced into acknowledging the obvious – that it is coming to a movie theater near you. Certainly a plunging US Dollar is not synonymous with deflationary pressures!

Samt en kommentar till utvecklingen för guld:

The technical posture of gold just got a tremendous boost with today’s good showing. Both the 10 day and the 20 day moving averages have now turned higher and momentum has now broken the downtrend line that has been in place for the last two months. What is now needed to put some icing on the cake is for momentum to move into positive territory. This will further encourage traders to Buy dips rather than Sell rallies.

Och slutligen några ord från Dan om den explosiva utvecklingen för silver:

A quick comment about silver – those of you who have been tuning in to my weekly radio interviews with Eric King over at King World News have heard us discuss its technical price chart. I am still watching for a strong close above the $30 level for a sign that this market is ready to kick up another leg higher. One can see the action of the Bears attempting to hold it down below this level by watching the 3 minute bar chart, as they realize what such a close would mean to their positions. Going into the close, it is apparent that they failed. If silver can stay above $30 the rest of the day, odds now favor a test of the recent high in short order. Keep in mind, as we discussed on our recent radio interview, the COT report shows that last week the hedge funds (managed money) finally began increasing their net long exposure after having whittled that down for the last couple of months. They are now returning to this market and doing so from a sharply reduced long side exposure. There is plenty of room available for them to begin piling back in and that is what leads me to believe that the recent high is going to fall. Also, a lot of guys sitting on the sideline waiting for silver prices to move lower so that they could buy are now realizing that they had better get in. That is what buying does – it begets more buying.

Eric Sprott har författat en ny artikel där han tar upp de faktorer som ligger bakom den gigantiska efterfrågan på guld från Kina, som bl a uppmärksammats i Financial Times nyligen. Något han liknar vid en ‘guld tsunami’.

Sprott noterar bl a det massiva intresserat bland kineser för det investeringsprogram (ICBC Gold Accumulation Plans) som lanserades i april 2010 där ‘vanliga människor’ ges möjlighet att månadsspara i fysiskt guld. Över en miljon konton har hittills öppnats och över 10 ton guld ackumulerats.

Här är ett par utdrag från artikeln (via ZeroHedge):

The World Gold Council does their own arithmetic on how much gold the Chinese can consume: “In 2009, per capita gold consumption in China was 0.33 grams, up from 0.17 grams in 2002.” Based on this data total Chinese gold consumption could range from 1,000 tonnes per year or more.12 This implies that the Chinese could consume almost half of the gold produced globally on an annual basis.

The ICBC Gold Accumulation Plan and other alternate methods of investing in gold have the potential to overwhelm current supply in the gold market.

We believe Asian demand for physical gold and silver is akin to a tsunami. While precious metals prices have corrected on the paper exchanges, the inflation resurgence in Asia is quietly driving new, unforeseen levels of physical demand for the metals. While the world continues to float on a sea of paper, this massive wave of physical demand silently threatens to crash into the physical gold and silver market, potentially wiping out tangible supply.