Market Overview

China developments great news for the gold price


Silver eligible for delivery at the COMEX warehouses has dropped 20% since December. When the eligible ounces hits zero, it will allow silver to seek its true supply/demand value.

As the following chart (courtesy Federal Reserve Bank of St. Louis) reveals, Central Bank easing continues ‘to the sky.'

Featured is the five-year gold chart courtesy The blue channel has defined the uptrend since 2008. Except for the credit crunch in 2008, the 300DMA (used here) has not been violated. The chances of a 2008 type of correction are slim, due to the amount of liquidity that has been added to the system. A bounce off the $1600 level and a breakout at line ‘B' will lead to the expectation that price is likely to repeat a performance last seen when line ‘A' was overcome.

According to in an article by Lillian Liu, the gold supply shortfall in China has widened 10 times since 2007. China digs up thousands of tonnes of rock and ore each year, but it still cannot produce enough gold to keep up with the country's soaring demand. Despite being the world's biggest gold producer since 2007, China's supply shortfall has deepened by nearly 10 times during the past four years.

Continue reading this article here.

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