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« Gold ‘Rush’ to Safety in Asia, Middle-East – Richard Maybury | Main | www.gold-prices.biz: Tops Four Million Views »
Sunday
Feb162014

Gold price signals China credit bubble bursting as investors seek safety

Uncertainty is growing over China’s ability to sustain the rapid rates of economic growth it has seen over the past decade


China’s “unfolding credit crunch” is having an unforeseen and dramatic impact on gold prices as investors urgently stock up on the precious metal as a form of financial protection against a sharp correction in the world’s second largest economy.

This is the main reason why gold prices have unexpectedly shot up more than 10pc to breach $1,300 (£776) an ounce for the first time since November against the prevailing forecasts for weaker demand made by many industry experts at the beginning of the year, according to Adrian Ash, head of research at gold trading platform BullionVault.com.

Gold traded on the Shanghai Gold Exchange has also reached a three-month high.

Rebounding is part of the reason for the rise, said Ash, adding: “Gold lost 30pc and silver nearly 40pc last year. The world economy will struggle to deliver all the good news priced in by that crash. But China’s unfolding credit-crunch looks central right now.”


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In September 2011 the Gold Bugs index, the HUI stood at 630 as gold prices peaked, since then both have trended lower with the HUI losing about 65% of its value. The bottom has been called a number of times and after such a dramatic decline its difficult not to think that we are there now. However, as we all know the timing of any investment is crucial to its success and that is exactly what we are trying to do here, trying to pick advantageous entry and exit points. If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

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Reader Comments (2)

Hmmm , I wonder if you are a little slow off the mark here Gold Prices

February 17, 2014 | Unregistered Commentersilver bug

Yes indeed we may be slow off the mark, but we were told that at the start of 2013 and 2012. Better rallies than this one have faded a quick look at the chart will tell that.

The next week or so should tell us if this rally has legs or not, so we will soon know.

take care, Bob K

February 17, 2014 | Registered CommenterGold Prices

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