For a few weeks I have been watching diligently for any news coming from China regarding its desire to own more gold. We've seen everything from the golden smoke screen, where we were supposed to believe Chinese Finance Ministers were cold on gold.
Then the truth started to leak out. First we see them selling Treasuries, then we see them embarking on a world expedition to buy more gold mines. They even made a deal to buy just the concentrates (ore) to have shipped back home for refining.
Now this! In a release today we see, China is trying to expand gold importing and exporting by setting up more banks to do the trading. From a Bloomberg article today we read, China may increase foreign members on the Shanghai Gold Exchange and will also study ways to allow foreign qualified bullion suppliers to deliver to the exchange.
And then comes the admission.
China's domestic production of gold, albeit the largest in the world, cannot satisfy its demand, said Ellison Chu, managing director at the precious-metals desk at Standard Bank Asia Ltd. in Hong Kong. By allowing more foreign participation and more Chinese commercial banks to import and export, China can better balance its demand and supply.
This stuff always seems to happen when half of America is trying to be on vacation. Like maybe no one will notice if we announce some changes. Make no mistake, China is moving faster and faster into gold. Gold demand is not slowing and the supply of gold coins for sale is not growing faster than demand.
As one analyst alluded, the recent pullback in gold prices may present the last best buying opportunity. $1500 gold by the end of the year would be no surprise to me.