Gold Moves From West To East

Gold Vault Opens in China

A gold vault that can store 2,000 metric tons, double China’s projected consumption this year, opened in Shanghai this month as owner Malca-Amit Global Ltd. seeks to benefit from rising demand in Asia’s largest economy.

“Such a facility is a massive vote of confidence for the Chinese gold market,” said Philip Klapwijk, managing director of Hong Kong-based Precious Metals Insights Ltd. “The trend for demand has been very strongly positive,” said Klapwijk, who’s monitored precious metals since 1988.

While gold in China and elsewhere in Asia is traditionally seen as a way of preserving wealth, Goldman Sachs Group Inc. and Credit Suisse Group AG are among those forecasting more losses. Bullion will average $1,175 in the third quarter of next year, according to the median of estimates from the 10 most-accurate precious metals analysts tracked by Bloomberg in a survey published last month. Prices were last at that level in 2010.
Investors sold more than 755 tons from gold-backed ETPs this year as holdings contracted every month, according to data compiled by Bloomberg. There is a risk that bullion may drop below $1,000 an ounce as the Fed withdraws stimulus and economic data improve, Goldman Sachs forecast Sept. 13.

My view:

A major undercurrent in the market is moving gold east.  The financial and geo-political implications are enormous for a global system based on a fiat US dollar.