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Avery Goodman: Defaults on gold loans in China will increase, not reduce, demand
12:24a ET Tuesday, November 24, 2015
Dear Friend of GATA and Gold:
Securities lawyer and gold market analyst Avery Goodman has joined GATA consultant Koos Jansen in accusing the Reuters news agency of false and possibly deliberately false reporting about gold.
Jansen's accusation was brought to you yesterday:
http://www.gata.org/node/15956
Goodman writes that contrary to Reuters' assertion, any default by jewelers on gold loans in China will increase demand for the metal, since the obligation to repay the metal will remain with the intermediaries that borrowed it and the gold to repay it will have to come from someone other than the original borrowers.
Also contrary to Reuters, Goodman writes, Chow Tai Fook Jewellery Group Ltd., the biggest gold retailer in China, did not report declining profit because of declining demand for gold but because of rising demand for gold, which carries less of a retail markup than gems.
Goodman concludes that the gold price remains low amid rising demand because "there is a not-so-mysterious gold supplier of last resort that is backing up its agents in the gold market by filling the ever-growing deficit. That situation cannot last forever, because not even 8,000 tons of gold (if it still amounts to that) are enough to last for more than a few years at the current burn rate. Gold prices will go up dramatically once this entity exhausts itself either physically or politically (with, for example, the election of a Republican president)."
Goodman's analysis is headlined "Chinese Gold Demand Booms as a Looming Dealer Default Could Cause an Even More Dramatic Increase in Gold Imports" and it's posted at Seeking Alpha here:
http://seekingalpha.com/article/3706236-chinese-gold-demand-booms-as-a-l...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATa.org
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