If Mervyn King were buying gold on the BoE's behalf, I don't think you'd rush out to buy gold. What makes you think his Chinese counterpart has better judgement?superfrank wrote:The Chinese are buying the dips (and they're not selling any).
I might actually go for a third option, and invest in Chinese infrastructure.superfrank wrote:If you were China what would you rather hold to preserve national wealth... something tried and tested over 6000 years, or IOUs from a bankrupt country in a currency being diluted and backed by nothing?
People's assumptions about gold holding its price might prove to be as ill-founded as people's pre-1929 assumptions about the stock market.
But if the Chinese are holding an amount of gold where they can get out of their position quickly if the market turns against them (and plan to do so), then it isn't too risky.
Jeff