China Bought Massive Amount of Gold Today

[pmbug]

Gold and silver bounced off of the lows today because of massive buying from the Chinese. A trader out of London told King World News, “The price discount in gold is the most welcome thing to the entire Eastern Hemisphere. The Chinese are buying very relentlessly because they know what is going to happen. We had a major, major physical buy order today. The Chinese bought a massive amount of physical today at the lows.”
...
The London Trader continues:

“They (the Asians) are aware of how tight physical supply is and they buy in London towards the fix because they know there is an 80% chance the commercials will take it down and they will get a better price. The Asians sit there and say, ‘Bring it on because we’ve got some orders to fill.’ They just want out of their dollars.

The commercials are doing some surgical moves at key times during the day. This is an attempt right now to get the tech funds and momentum traders into going short. But guess who’s down there competing to buy along with the physical orders? The commercials, the same ones who kicked off the selling. The commercials want out of their shorts....

“What we are seeing now is this consolidation pattern where the commercials are getting out of their short positions whenever possible. All the while they are squeezing fresh shorts. They take the metals down, make the charts look bearish to bring in fresh shorts and later they squeeze them out of their positions on a rally and pocket the money.

As I said earlier, we had a major physical buy order today. The Chinese bought a massive amount of physical today at the lows and that is why the market turned where it did because of the intensity of Chinese buying.
...

http://kingworldnews.com/kingworldn...hina_Bought_Massive_Amount_of_Gold_Today.html

How long can the commercials play this game? Until the supplies dry up. Musicals chairs on a global scale...

 

[FCHorn]

Any word of the size of the purchase besides "massive'?

 

[pmbug]

Unfortunately not. KWN reports from "the London trader" tend to be lacking in fine details. I've been reading them for over a year now though and have come to appreciate the posts as they generally turn out later to have been correct.

What really struck me about this post was the contrasting news to the Asian hedge fund margin call selling that was reported earlier.

Hedge funds selling paper contracts, presumably the government / central bank buying physical.

 

[pmbug]

KWN posted a follow up from the "London trader" today:

...
“As soon as we see a delay in shipments to end users they will race each other to stock up. This will send the price of silver through the roof and break the backs of the silver shorts. It has already been made public that a firm in Canada had to wait three months for a 15 million ounce order. It was also made public that much of the silver they received was refined after the initial order was placed. So that is the actual fact, that is how tight the silver market is today and has been for some time.

All of the sudden the game has changed because you have actual investment demand increasing exponentially vs industrial demand, competing against industrial demand to buy. All of these sovereign entities buying silver know it's manipulated. There are shortages in the Middle-East in silver, generally it's an incredibly tight market on the physical side. In Shanghai we are seeing $1.50 premiums on silver and that's every single day consistently.

The tightness in the market is the reason why when the Chinese buy massive tonnage of silver they have a long wait to receive physical delivery. The end users are in line in front of them. So now the silver market is on a razor’s edge because they are trying to make sure the industrial users get their silver, otherwise all hell breaks loose.”
...

More: http://kingworldnews.com/kingworldn...ign_Silver_Buying,_Middle-East_Shortages.html

Investment vs. industrial demand was highlighted here:

http://www.pmbug.com/forum/f3/investment-demand-vs-industrial-demand-11/

 

[DSAbug]

This is the same kind of news I was hearing back in 08. Only difference is, that time gold had correct 30% off it's highs and this time gold has corrected 15% off it's highs.

I'm seeing the dollar fall out of bed this morning in the premarket. new low for the move.

This is a little surprising to me that they are doing this on OP-X

 

[pmbug]

China's gold demand isn't just being driven by their central bank:

...
Many small investors in China have turned to gold as high inflation threatens to erode wealth in the world's second-largest economy, leading to small gold exchanges springing up all over the country.

The influx of retail investors promises to not only boost Chinese gold demand, but also increase its volatility.
...
The country's property market, once a popular choice for investors, has suffered from a government crackdown on speculation.

"I still have some money in the stock market, but it's been trapped since the market crash in 2007. Ever since I started doing gold, I don't want ever to deal with the stock market again," said Ren Yanhong, who runs her own clothing business in the eastern city of Shaoxing and started investing in gold in 2008.

A number of new exchanges have mushroomed over the past year in cities away from the business hubs of Shanghai and Beijing.

"Investment demand is very big," said Shi Heqing, an analyst at state-backed metals consultancy Antaike in Beijing.

"These emerging exchanges are trying to lure investors who are not totally happy with the existing market in Shanghai."
...

http://www.reuters.com/article/2011/10/26/us-china-gold-exchanges-idUSTRE79P0XX20111026

 

[DoChenRollingBearing]

Buying massive amounts of gold is what I would do if I had more money!

 

[pmbug]

China's gold demand will likely rise to 800 metric tons next year, World Gold Council Far East managing director Albert Chang said Thursday.
...

http://news.investors.com/Newsfeed/...d-Demand-Likely-Rise-To-800-Tons-In-2012.aspx

 

[DCFusor]

My own trading system (as opposed to long term stacking) had you out of gold where the cursor is in the chart attached, and perhaps into GLL where it crossed the 50 sma going down. I'll look to buy more trading stake (again, as opposed to long term phyzz holdings) if we bounce off the lower trend line I've drawn on this chart. If we get below that line, but then turn up for a day or two (if I also see encouraging news for gold), that's when I'll add to the phyzz stack, myself. Right now, I'm adding to the food stack I'm acquiring, as it's uniformly growing in price even quicker than my market shorts (which are a hair trigger trade I'll close at anytime they start going against me) - and I rotate what I eat though this, so I'm eating food at a couple months ago prices.

I'm not a huge believer in charts as magic predictors by themselves. What I do believe is that other people make their buying and selling moves based on what they see, and therefore add some self-fulfilling aspect to it. Without that, they'd not be worth nearly as much as info.