Gold is a laggard today, falling $27 to $2,630.
It’s only a 1% drop and comes after a massive rally but it’s worth looking at gold now in light of what’s happening in China.
Gold daily
I’ve made this point several times in the last week or so: China has been the biggest buyer of gold this year. The central bank stopped buying in May (at least officially), but retail quickly picked up the torch. Gold volumes have increased in China.
When I wrote about the very simple case for buying gold in August, the basis of the trade was that Chinese investors were moving away from real estate and stocks, so gold was the winner, partly by default.
And with last week’s stimulus news and the huge rally in stocks, that could change. Do people who bought gold sell it and buy stocks or real estate instead? I think there is a lot of money on the sidelines that could boost both, and it’s not just China buying gold, it’s a point worth considering.
The good news for gold bulls is that the seasons run very strong from November to January, so any dip could be a buying opportunity, but I think it is worth waiting for a bigger drop than this one.