Gold News: Does China Pull the Strings?

We’ve talked before about how the gold market might be manipulated. And if you search the Internet you’ll find just about every theory imaginable – sane, crazy, or kooky.  The question everyone wants to know is this:

What does the Gold Enthusiast think about the possibility of gold manipulation by the Chinese?

Rather than write a 20-page paper explaining everything, I’ll just give you a few top-line views, two bottom line possibilities and let you think about it.

First the top line.  Historically the Chinese are known for their long-term outlook.  Remember this is the country that invented Go, possibly the most complicated strategy board game mankind has devised. (By specifying “board game” we exclude international politics, which is by far the biggest game in the world.) Successful strategies in Go all revolve around long-term preservation of assets while maneuvering for a strategic advantage.  So where Western culture might encourage one to go after a short-term gain, in Go-thinking you would only do that if the result was also to your long-term advantage.

Logically we want to apply that way of thinking to the gold market.  What would be the best long-term result for a country in terms of gold?

Well, to quote an American saying, More Is Better.  Certainly when you’re talking about valuable assets, having more available is better than having less available, given that the asset in this case has unlimited shelf life.  (Unlike food and such, gold doesn’t rot away over time.)

So the goal would be to pile up as much as possible.  And that’s exactly what we see China doing. Chinese national policy is that gold has a one way street – In.  There is no Out for gold once it gets into China; they don’t sell their national store of gold, nor do they loan it out (yet).  All Gold Stays In China.

 Related: Learn Why This Bank Expects Gold to Rebound

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated with a business degree, then worked with Macy's. After Macy's he spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined a well-known financial planning firm as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where he worked first for a small manufacturing consulting company, then a major university. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoken at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

Leave a Comment