Today’s news and yesterday’s news, with gold declining, is very interesting. The most important reason put out by the bullion banks and the mainstream media had to do with the study released by the World Gold Council that suggested that not all of the gold that’s been imported into China has been used for central bank reserves or has gone into retail safekeeping.
I would point out that what that means is that a whole class of creditors and debtors in China believes that gold is good security. There are a lot of other assets that they could have used for ‘good’ security such as U.S. Treasuries. One suspects that China has enough U.S. Treasuries already and that an alternate asset class is what is required to effect the financial transaction.
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