From Gartman this morning:
THE PEOPLE'S DAILY SPEAKS
RATHER LOUDLY 'BOUT GOLD: There
are a few publications in China that really do speak on behalf
of the government in Beijing, but when The People's Daily
"speaks" we have come to understand that this is, for all
intents, the voice of Beijing. It is via The People's Daily that
the Communist Party floats trial policy balloons . It is via The
People's Daily that the leaders make their wishes know.
Thus, when The People's Daily speaks about gold, we listen.
It spoke last week and said, quite "loudly" that
It is only a question of time for Asian central
banks to follow and buy in gold: they hold 2.6
trillion US dollars in foreign exchange reserves,
and [are] able to change more of them into gold
as a hedge against US dollar falls.... Budget
deficits and debts in Europe, America and Japan...
meanslower growth rate and lower prices of
stock, bond and real estate as well as faster
increase of inflation -- a golden opportunity for
central banks to buy in gold.
Asian countries have good reasons to hold more
gold. Compared with developed countries, their
percentages of gold in foreign exchange reserves
are apparently small. As the World Gold Council
pointed out, Asian investors are the world largest
gold consumers, but gold only takes 1.1 percent in
China's official reserves, or 1.3 and 3.6 percent
in Japan and India respectively. A sharp contrast
is the American percentage of 63.8 percent, and
over 50 percent in Germany, France and Italy
respectively. Due to fluctuations of major
currencies, Asian countries may not choose to
change their US dollars into euros. Meanwhile,
they don't like holding too much dollars, so one
of the way outs is simply to have more gold.
By The People's Daily Online
We take exception to some of the conclusions arrived at by
the article, for indeed the US dollar is not weak, it is strong.
Further we are not certain that the printing of bank notes is
being done with the expressed purpose of devaluing various
currencies. We may argue with the percentages noted above;
however, on balance we think this article clearly supports our
thesis regarding the buying of gold by the reserve banks of
Asia and the developing world. With this thesis we shall
obviously not take issue; indeed, we think it wise."
How's that for formatting?
Formatting is NG, but idea presented quite correct - Asian buying will push gold higher. Central Bank overhang is very unlikely to be a depressing factor, anymore. Hedging programs by producing miners have become less popular, also.
With about 60% of my not inconsiderable stock portfolio in five Canadian-listed gold and silver juniors, I look forward to the next few months, and maybe years. ;^)
Sneer at gold all you like - folks are paying up to acquire it, and the miners will finally reap some windfall benefits, after years of ugly markets.