StreetTalk

China’s Central Bank Recommends Gold For “Value Preservation”

Mar. 26 2011
By ROBERT LENZNER

Believe it or not Ripley! The People’s Bank of China(PBOC) recommended yesterday that 1  billion Chinese consider buying gold as a  hedge against inflation and to preserve values in a world where currencies can fall. The PBOC Financial  Markets Review came out just  as several major currencies  were indeed declining in value against gold; the dollar,1%,  the Swiss franc,2.5%, t he  British pound, 2%, and the Japanese yen, 2%.

Wow! Be like the Fed  telling you to buy oil stocks or crude oil futures  due to expectation higher gasoline prices this summer.

So, add the PBOC to  other secular influences on the price of gold; namely the conflict in Libya, the European sovereign debt crunch, the developing nuclear disaster in Japan and the extraordinary  political unrest in Syria, Yemen, soon traveling to other Middle Eastern capitols. All unexpected by financial market analysts.

And  whoever could conceive in their wildest fantasies that 12 states of the union- including New Hampshire, Vermont,  Colorado, Indiana,  South Carolina and Washington would propose  to allow their citizens  to use gold and silver coins as legal tender. Gold and silver coins to pay your  rent, grocery bills and taxes.

And did you now that gold was selling quite well to ordinary citizens of  India at 466  post offices on the subcontinent.  Or that India has public companies that offer credit to people wishing to buy gold or silver.  Loans to buy gold and silver.

No wonder  gold equities  were  up 5.07%  last week, though bullion only rise 0.75%.

Where to now  for gold? Goldman Sachs says $1565  in 6 months and $1690 in 12 months. That would be  a nifty  18% in 12 months. Though, Goldman warns  a  short-term lift could spark profit-taking. Hasn’t  turned the  big holders like Soros and Paulson and their brethren in hedge funds   into liquidators yet. That will require Fed Chairman Bernanke to raise interest   rates.

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