About this time last year China was giving out data and reports that thier economy was slowing down…..
This year is no different!
China has raised rates six times in the last year, so it would be safe to assume that if there was a true slowdown, rates could just as easily be lowered if need be. Makes sense, don’t you think.
The same happened last year when China was in need of certain commodities and became buyers after the price drops as a result of their scare tactics. A slowing Chinese economy will strike fear in the global financial markets and cause shutters across the board, afterall there is over a billion consumers in China and their individual wealth is continuing to grow. So with China having one of, if not the fastest growing economies, any hint of a slowdown will have an effect on goods.
Including gold and silver…
With the recent announcement of “Operation Twist” which was a twisting of funds from short term treasuries to long term treasuries, or as some say a twist on the name “QE” and is really just a form of “QE3”, it is causing the treasuries owned by China to become more valuable. This value increase could not have happened of course without the problems in Europe and the recent move by the swiss to stabilize and lower the value of the franc. Anytime you got in trouble as a kid and even in your adult years, you always run to Mom and Dad, regardless if they can truly help you or not. So, with the franc… being adjusted… and longer term treasuries being bought, the dollar is pushing up now.
This makes for a perfect scenario for American investors. With metals down and the dollar up, it is an ideal time to exchange our fiat currency for hard money in the form of gold and silver at discounted prices.
So thank China and Bernanke for this recent correction in metals that has opened the window of opportunity once again for those that have thought they missed the boat entirely.