Theory On China’s Gold Strategy

Koos Jansen’s latest study offers initial proof of a speculation we published here when China announced its change in the yuan price discovery mechanism.  “China says it wants a say in the gold price and that’s why it established its own fix outside of London and New York’s purview.  If the price of gold in yuan goes higher, it adds value to both Chinese gold reserves, which are likely much higher than recently announced, and to the asset structure of the Chinese people and banks that are hoarding it.  In fact the low announcement may have been in anticipation of the devaluation strategy. Too, if the yuan price goes higher, it could force the dollar price higher in order to discourage arbitrage of physical metal globally into China.” Jansen, an expert on the gold market in China, herein offers the first proof that this might very well be the case. This strategy is of great importance to the long term price trend in the gold market and well-worth monitoring. We will attempt to keep you informed. MK