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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 12/24/2007 : 22:56:51
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China expected to buy gold and platinum but wait for lower copper prices
The Associated Press
Published: December 21, 2007
NEW YORK: Copper-loving China is turning instead to gold and platinum as the price of the red metal continues to sink and it sees precious metals as good investments against currency concerns, market watchers say.
A string of interest-rate hikes in the world's largest copper-buying nation could further dampen demand for the metal as increasing bank reserve requirements make borrowing more difficult for copper producers and smelters that want to expand capacity.
Meanwhile, the Chinese are buying gold and platinum as an investment, seeing the metals as a hedge against the declining U.S. dollar and anticipating they will rise further in price, said Ralph Preston, senior market analyst with Heritage West Financial.
While this buying is among supportive factors for the price of gold and platinum, market participants in the Asian nation still see copper as overpriced and aren't stepping in right now, contributing to copper's recent price slide, market watchers say.
The Chinese are staying away from the red metal because they "don't want to just throw their money into the wind," Preston said. "Even though they've got a bunch of money, they don't want to go spending it frivolously."
Today in Business
Frank Lesh, broker and futures analyst with Future Path Trading, said the Chinese are showing some buying interest in copper. But that might not show up as much in price moves for the metal like it does in platinum.
That's because the market for copper — as well as for gold — is larger than the one for platinum, so price reactions could be exacerbated in the white metal's smaller market.
"I wouldn't doubt they're buying the platinum," Lesh said, adding that the Chinese need the metal for their burgeoning automotive industry.
Catalytic converters for automobiles are one of the main industrial uses for platinum.
In addition to manufacturing uses for gold and platinum, the Chinese are also buying the precious metals as a hedge in case Beijing decides to let the yuan float, said Larry Young, senior trader with Infinity Futures. The currency is only allowed to fluctuate in a range that is tied to the value of the U.S. dollar.
"They're looking at several strategies" for trying to get the lowest price for their commodities, Young said.
Because of a worsening global economic outlook and financial-market uncertainty, the Chinese want the safe haven that gold and platinum offer even above Treasurys, Young said.
"They want something that they can touch and feel," Young said.
At the same time, China isn't entering the copper market in force, Young said.
"They're still anticipating a pullback in price," Young said.
Players in the Asian nation are anticipating additional supply coming onto the market from mines that ramped up production last year when prices were higher, Young said.
Of China's $1.3 trillion (€900 billion) in cash reserves, nearly 65 percent is in U.S. Treasurys and only 1.6 percent is in physical gold, said Bill Reynolds, investment adviser and commodity specialist with Wellington West Capital.
"This past year — rightfully so — their belief that the U.S. dollar was and will continue to devalue ... has had the Chinese government and others continuing to purchase gold," Reynolds wrote in an e-mail. "This, along with a more liberal Chinese government, which has allowed the citizens to now purchase more luxuries, such as jewelry."
As the world's most populous country, that demand will likely continue to support precious metals prices, Reynolds wrote.
In copper, China's importers are reducing yearly bookings for 2008 delivery because they are concerned that a Beijing-led economic slowdown will dampen overall demand for the red metal, Reynolds wrote.
The People's Bank of China on Thursday lifted its benchmark one-year lending rate by 0.18 percentage point to 7.47 percent, the nation's sixth interest rate increase in 2007 aimed at curbing inflation.
"We think these measures, along with the steep rise in banking reserve requirements, will eventually slow the Chinese economy down since the hikes are now occurring from elevated base levels and are likely to have more impact," an MF Global research note says.
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Matt Whittaker is a correspondent of Dow Jones Newswires.
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Think positive. |
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copperbullion
Penny Pincher Member
Australia
136 Posts |
Posted - 12/26/2007 : 04:22:26
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| I wonder why they are not buying silver also??? |
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Hirbonzig
Penny Collector Member
USA
451 Posts |
 Posted - 12/26/2007 : 05:17:31
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quote:
Originally posted by copperbullion
I wonder why they are not buying silver also???
You would think they would go after the undervalued silver rather than gold and platinum. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/26/2007 : 20:52:31
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Perhaps the reason China isn't hoarding silver is because it is a large silver miner and exporter.
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Per 2005 figures, China produced 2,102 Tonnes of silver and consumed 1,726 Tonnes.
Maybe China has a national silver reserve that they keep secret from the rest of the world.
(I'm just guessing, I have no idea if they do or not.)
China's gold prooduction, 2005
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224.1 tonnes of gold produced, 257 tonnes consumed.
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fiatboy
Administrator
912 Posts |
Posted - 12/27/2007 : 02:43:36
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quote:
Maybe China has a national silver reserve that they keep secret from the rest of the world.
I know India does---remember, they worked overtime behind the scenes to give the Super Hunt Bros. the boot back in '80; and a little birdy told me that China has a very large stockpile, as well.
Never forget how rare platinum is. Every little bit counts. Silver is rare, indeed, but far easier to hoard and have no one take notice. It's still in the shadows. People notice when platinum moves. And platinum is more of a political metal than silver. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 12/27/2007 : 12:21:27
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| All I know is that if I were a huge buyer of metals I wouldn't leak out the truth of what I intended to buy. Why encourage others to do the same? Maybe China will really go for the copper and silver instead now that they have tried to discourage those prices. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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fiatboy
Administrator
912 Posts |
Posted - 12/27/2007 : 15:55:22
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quote:
All I know is that if I were a huge buyer of metals I wouldn't leak out the truth of what I intended to buy. Why encourage others to do the same? Maybe China will really go for the copper and silver instead now that they have tried to discourage those prices.
That makes a lot of sense. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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copperbullion
Penny Pincher Member
Australia
136 Posts |
Posted - 12/28/2007 : 06:20:06
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| I agree, copper and silver are worth hoarding, but don't tell anyone shhhhhhhh....... |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/05/2008 : 22:26:50
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A late follow up of sorts:
I was reading some of the prior Mogambo guru postings and I found this:
"David Bond, associate editor at Free Market News, says. China, he says, has admitted that they have literally run out of silver, and now they need to buy it! A country so big that it has almost five times as many people as ours needs to buy silver, because we, a country that has five times fewer people in it, have used all the silver to get to where we are! I mean, the potential demand for silver staggers the imagination!"
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I can't say this is 100% true or 100% false, but like everything else in the world of economics and metals, there is more smoke and mirrors and sleight of hand going on than you will find in a magician's convention. |
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fiatboy
Administrator
912 Posts |
Posted - 01/06/2008 : 22:26:19
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| My girlfriend is back from China, and she said that yes, gold and platinum are popular over there, but silver has a significantly higher markup---along the lines of $25 to $30 per ounce. |
"Bart, it's not about how many stocks you have, it's about how much copper wire you can get out of the building." --- Homer Simpson |
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China expected to buy gold & platinum but wait ..
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