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China Is In This Market For The Long Haul

"The precious-metals market took notice for all the right -- but not-so-obvious -- reasons when China announced last week that it ramped up its gold reserves by 76% in the last six years.
After all, the world's largest producer of gold, which also happens to be the world's most populous nation and third-largest economy, must have a good reason for its purchases -- and quite a few experts said the move solidifies gold's place as a monetary asset, and shows that it's destined for a brighter future.
"The important take-away is that China itself is absorbing the bulk (if not all) of the production of the world's largest producer of gold (also China) with the now confirmed intent of building reserve holdings," said Peter Grant, a senior metals analyst at USAGOLD-Centennial Precious Metals.
"That is very favorable for the longer-term outlook for gold," he said.
Last week, China announced that the amount of gold in its reserves has climbed to 1,054 tons from 600 tons in 2003. See Metals Stocks column.

"China ... has taken the golden path and now they want the world to know about it.'

— Michael Kosares, Centennial Precious Metals

"China, true to its reputation for patience and steady, long-term progress toward its goals, has taken the golden path and now they want the world to know about it," said Michael Kosares, president of Centennial Precious Metals.
The nation has become the fifth-largest individual-country holder of the precious metal.
And it didn't just announce its gold accumulation last week. It also asked the International Monetary Fund to sell its entire 3,217 tons reserve, Kosares points out.
And why would China encourage sales that could potentially depress the price of the gold it just bought a lot of? So it can buy more, said Peter Grandich, a metals writer at Agoracom, an online marketplace for small-cap investors.
The request, combined with the announcement on reserves, "is intended to deliver a message to the financial markets [that China] sees gold as an important part of the overall international monetary scheme -- a scheme that may evolve to a system in time," said Kosares."

this is from an article in Marketwatch.

China is losing a little faith in the USD and this is one way to reduce their risk. So Gold and Silver will continue to be good investments during this current economic climate.


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