7 de abril de 2007

Gold and China

Fireworks for Gold
In 2007

It’s not a secret: Beijing’s coffers are bulging with a trillion greenbacks.

And every day they are worth less. So Beijing is doing the sensible thing— diversifying.

First stop: gold.

According to the IMF, China holds just 1.4% of its total foreign exchange reserves in gold. The average is 5% worldwide.

If Beijing decided to rebalance its reserves with 5% gold, it would have to buy almost a year’s global gold production!

So even a few percentage-points shift to gold could instantly create a supply crisis forcing gold up to historic highs, close to $831!

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