This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chinese Housewives vs. Goldman Sachs: No Contest

Jeff Clark, Senior Precious Metals Analyst

NEW YORK ( TheStreet) -- Never mind the schizophrenic gene that would be required to follow the constantly fluctuating predictions of all these big banks; it's amazing to me that anyone continues to listen to them after their abysmal record and long-standing anti-gold stance.

Sure, the too-big-to-fails can move markets -- but they say things that are good for them, not us.

As an example, while Goldman Sachs (GS) was telling clients and the public to sell gold in the second quarter, it bought 3.7 million shares of SPDR Gold Trust (GLD) and became the exchange-traded fund's seventh largest holder.

When I visited China two years ago, guess who no one was talking about? Goldman Sachs. There was news about the U.S., of course, but the regular diet of journalistic intake consisted of Chinese activity, not North American. And -- surprise, surprise -- the view from that side of the big blue ball was materially different than what we hear and read here--and in some cases, the opposite.

Not only has the average Chinese housewife, perhaps the most frugal and cautious species of savers in the world, probably never heard of Goldman Sachs and their call for $1,000 gold -- if she had, she would think: (Rubbish!)

Here's some evidence. Since Jan. 1, gold ETF holdings have fallen by roughly a quarter (26%, according to GFMS). But Chinese housewives aren't refraining from buying and certainly aren't selling:

The red dotted line represents the total outflows of GLD through last Tuesday. The gold bars are cumulative monthly imports of gold to China, through Hong Kong. You can see that China has absorbed roughly twice what most North American ETF holders have sold. It's actually more than that, because we only have Hong Kong import data up to the end of July.

But it's even more dramatic than this.

If you dig down into the data further, you find that cumulative gold imports through July surpassed the 26.7 million ounces (831 tonnes) that was imported to China for the whole of 2012.

That means rather than being deterred from buying gold when its price was declining this year, the Chinese were snapping up the yellow metal as fast as they could. Further, last year Chinese miners produced 12.9 million ounces (403 tonnes) of gold, all of which stayed in the country.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
GLD $107.73 0.06%
SLV $13.80 1.77%
AAPL $112.92 2.94%
FB $89.73 2.91%
GOOG $637.61 1.43%

Markets

Chart of I:DJI
DOW 16,654.77 +369.26 2.27%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs