China warns of possible gold bubble...
theglobeandmail.com
Gold prices are currently high and markets should be careful
of a potential asset bubble forming, a senior official at
China's central bank said on Wednesday, as prices for the
precious metal hit a record high.
“We must keep in mind the long-term effects when considering
what to use as our reserves,” Hu Xiaolian, a vice-governor at
the People's Bank of China, told reporters in Taipei, when
asked if China had plans to increase its gold holding in its
foreign exchange reserves.
“We must watch out for bubbles forming on certain assets, and
be careful in those areas.”
Gold hit record highs at $1,216.75 (U.S.) an ounce in Europe
on Wednesday as investors bet on higher prices.
China's more than $2-trillion in foreign exchange reserves are
mostly parked in U.S. treasuries, despite calls from some in
China to invest the reserves in oil and other natural resources
that the fast-growing Chinese economy will need in future.
Before gold prices hit record highs, however, China said last
month that it is working to improve the allocation of assets
in its foreign exchange reserves, when asked whether it would
buy any of the gold that the International Monetary Fund is
seeking to sell.
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A bubble, or talking their own book?
Wasn't China running TV ads encouraging it's citizenry
to buy gold and silver just mere weeks ago!?!
Gold and silver were cheap at $1000 and $16, but just weeks,
(and a 200 ton Indian IMF buy) later, are in a bubble at $1200
and $19?
I think China's trying to talk down the price of that 2nd 200 ton
IMF tranche that India may beat them to the punch on, once again.
When you finally get the wind in your sails, is not the time
to drop anchor.
Move stops up tight, (I've raised them from HUI 460 to 480).
Add a few puts for insurance.
And nothing wrong with taking a few chips off the table into
further strength. But when you got the Mo, you got the Mo.
You have to give gold the opportunity to pull the gold stocks
through that HUI 518, prior all time high.
Gold miners are hitting new 52 week highs on a daily basis
here, and lighting up the IBD new high and momentum lists.
And momentum attracts more momentum.
Use sound money management strategies (puts & stops) to take the
emotion (greed) out of the trade, but continue to let 'em run.
SOTB
PS: Silver and silver stocks are still cheap to gold and
gold stocks, so overweight accordingly.
And don't forget metal diversification... Palladium is
a laggard and Platinum is still cheap to gold.
And FDR didn't come after either.
;) |
