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« Hopes rise for Greek debt deal | Main | BENZINGA RADIO: Exclusive Interview with SAM KIRTLEY of SKOPTIONSTRADING »
Wednesday
Jan252012

Eric Sprott - Aggressive Chinese Buying Will Spike Gold Price

Just in case you missed this, we spotted it on Eric Kings site, King World News, which is well worth a few minutes of your time, in our humble opinion. We have mentioned KWN on more than one occasion so hopefully you have book marked it by now, haven’t you, yes?

Today billionaire Eric Sprott told King World News the Chinese cannot continue to buy gold as aggressively as they have been without there being a dramatic increase in the price.  Eric Sprott, Chairman of Sprott Asset Management, had this to say about Chinese purchases of gold and the recent announcement that Iranian oil will be acquired using gold: 

“There are two things I think are important about that.  One, it’s a statement that gold is a currency.  That is by far the most important thing.  I think the other thing is, if it actually transpires that way, what does it mean for the demand for gold?  Because now it’s considered currency, it’s, in essence, your working capital.  You have to have it.  It’s like a store, you have to have money in the till.”

Eric Sprott continues:

“So it’s obviously going to increase the demand for gold and we have seen some data that China has been a rather large buyer of gold.  People will consider it a currency and it has to necessitate more buying.  You know, Eric, I think one of the really interesting things that happened was the imports of gold into China, from Hong Kong, which always were less than 20 tons a month, all of the sudden, beginning about 5 months ago, went 20 (tons), 30, 40, 80 and in November 102 tons.  102 tons is a staggering number.

The world mines, excluding China, less than 200 tons a month.  China cannot continue to buy 102 tons and not have the price escalate dramatically.”

Sprott had this to say about today’s Fed announcement that it will leave rates at zero until late 2014: 

 “Obviously it’s dramatic what has happened.  It would appear there will be no restraint whatsoever on the part of the Fed.  Assuming this announcement causes gold to break its declining wedge, which I believe it has, I expect some serious fireworks to the upside.”

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