Gold's Friends Now Outflank Its Foes
Source: GoldSeek, Rick Ackerman (11/23/09)
". . .the larger, bullish environment for gold contains more testosterone than a Chicago stockyard."
And they are, along with Russia, Indonesia, Arabia and every other sovereign entity that is not afraid to offend the U.S. with a defensive leap out of dollars. Under the circumstances, now that its fan club has grown to encompass the entire non-English-speaking world, gold can barely sell off any more. China is naturally gold's biggest supporter, since the country supposedly holds three quarters of its $2 trillion cash hoard in dollar-denominated instruments, among them an Everest of U.S. Treasury paper. Since we know the Chinese didn't get that rich by being stupid, we can be fairly certain they are not content to merely "hope" that the U.S. economy turns around, taking the dollar along with it. This scenario is as implausible as a credit-financed auto-and-housing boom in the U.S., and they know it. And so we shouldn't be surprised to find them quietly buying bullion whenever a large quantity is offered for sale.
This type of buying does not typically drive gold quotes into a bullish frenzy; rather, it supports the market whenever prices turn soft. (There will always be big sellers around to make this happen—Great Britain, for instance, which treats sovereign gold as though it were radioactive. And why should they not, since, as long as a government stores the stuff as though it were valuable, the citizenry is bound to harbor the subversive notion that gold is itself money.)