The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Frank Holmes NEW YORK ( U.S. Global Investors) -- To paraphrase the great Steve Martin, today's investors are very passionate people and passionate people tend to overreact at times. An overreaction is exactly what's happened in gold and global markets in recent weeks. While market bulls have been sniffing out data points to support their case, market bears have continued to take a glass-half-empty approach. Gold and China are two areas that have been caught in the bear trap this week, but we believe the gold and China bulls still have room to run.
While we are seeing strong signs of improvement in the global economy, it's important to remember that the recovery has been built upon a mountain of printed money that cannot be hastily unwound. Dr. Murenbeeld explains, "Money doesn't grow on trees; it will have to be borrowed by some government and/or it will have to be printed by some central bank." This is why we believe the bull market for gold remains intact.
April 5 "Hard or Soft Landing in China?" webcast , higher fuel prices will only modestly impact Chinese consumers because few come in direct contact with unsubsidized gasoline. Andy estimates that fuel accounts for only 2 percent of China's Consumer Price Index (CPI) basket, compared to 5.4 percent in the U.S. We're also seeing positive developments in an area where Chinese consumers are vulnerable -- housing prices. According to CLSA and China's National Bureau of Statistics, home prices fell in 27 cities on a year-over-year basis during February, three times the volume in December. gIn addition, none of the 70 cities tracked reported more than a 5 percent increase in new home prices. A gradual reduction in home prices is exactly what the country needs to prevent a major housing crash, but don't expect the Chinese government to let the bottom fall out. Remember, the minimum cash down payment for a Chinese home buyer with a mortgage is 30 percent. Investors are required to put 60 percent down in cash. Currently, about one-third of home buyers are paying all cash, according to CLSA. Andy says the government is poised to relax the country's strict housing policy measures as soon as this summer if the decline accelerates.We'll be discussing these developments and more during our April 5 "Hard or Soft Landing in China?" webcast with Andy. Sign up today.