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Tuesday, March 9, 2010

China Downplaying Interest in Gold

As many following China and its acquisition of gold have noted, it has shown they are nervous about their holdings of U.S. Treasury's, and China is now attempting to spin they're not as interested in gold as they were before, seeming to attempt to shore up their interest in U.S. Treasury's, even though they are a very poor investment at this time, and will be long into the future.

More than likely it is also a nod that China may be buying gold again, but doesn't want to show its hand so prices don't skyrocket and make it more expensive to acquire.

Another problem for China is it'll have to ease off buying Treasury's slowly, as it would have a detrimental impact on their manufacturing base and exports.

China has been working up growing its domestic economy in order to not need to buy into U.S Treasury's to grow its markets.

With U.S. consumers having slowed down their spending, even if China buys Treasury's it may not be that helpful to them if Americans don't turn around and buy products from the country.

So while gold is probably the better investment taking into consideration the economic climate, China has to continue playing a balancing game until their domestic economy matures more.

Until then, gold will be better for them to invest in, but for the sake of their manufacturers and exports they'll probably be forced to buy U.S. Treasury's until that changes.

So investing in gold will continue, but it'll probably be much quieter and probably not at former levels, although it's hard to tell with the Chinese which way they'll go and how they're going to do it.

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