My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following.
Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.
Guess Who Has Been Buying Gold Bullion?
One guess who has been buying gold bullion since 2003? This has not been for gold charms or gold necklaces.China has purchased approximately 454 “TONS”. Could this be one of the reasons gold prices have soared since then? China’s track record of investments has been poor of lately as one can look how they purchased BlackStone. A whooping $3 Billion dollars. This is not to mention Morgan Stanley. Maybe these are just paper losses. Time will tell. China’s holding of Gold Bullion is ranked 6th in the world. We need to put this into perspective,China holds the world’s largest foreign exchange reserves, approx $US1.95 trillion, and percentage wise gold bullion is approx 1.6 % of that total. In relative terms it can be stated the gold bullion that China is holding is simply a small diversification. Or is it? China expressed distrust and disdain over the possibility of a US dollar devaluation. Due to the fact of tremendous Chinese holdings of US treasuries Chinese Premier Wen Jiabao raised his concerns. Obviously a weak US dollar could easily negatively impact China’s $US744 billion of US govt bonds.
The funny thing is who do you think holds the most gold bullion in the world? It is not the Saudis or even the Kuwaitis. Try the USA. YUP… even in this crisis the US is the largest holder of gold bullion. The United States gold reserves are stated at 8134 tonnes. Next is Germany with 3413 tonnes. Then France with 2487 tons and most surprising Italy with 2452 tonnes.
The IMF has been trying to bail out half the world recently. In order to do so they are net sellers of Gold. They have sold approx 40 tonnes. The question rises with the IMF a net seller and China a buyer, what will happen to the price of gold bullion? More so with all the printing of money what will happen to Gold bullion with the wild card that the US is holding the most gold bullion in the world. It all seems to boil down to an interesting game. So much for gold necklaces and gold charms.
What do you think?
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