China Gold Consumption Going Exponential

kingworldnews.com

With continued strong Chinese and Indian accumulation of physical gold, today King World News interviewed acclaimed money manager Stephen Leeb. When asked about the massive physical buying out of Asia, Leeb replied, “People want a currency they can rely on and gold really is a currency. If you are sitting there as the Chinese right now with $3.2 trillion, do you really want to have more dollars when we are likely to get the printing presses going full tilt?”

Stephen Leeb continues:

“Do you really want to buy the euro when you have Greece, which is spending like a drunken sailor, no. You want something that is going to be around for as long as you’ve been around, and the only currency that has been around for as long as the Chinese have been around is gold and silver.

Right now my guess is Chinese consumption of gold has been exponential. China and India will take off of the market 1,000 tons a piece this year. That’s about all of the gold in the world that we are going to produce this year. What that means is any additional gold that you want, you’re going to have to buy it from somebody who already has it. I don’t think anyone is really going to want to sell it.

And when it comes to silver, the Chinese are going to be in the market for tons and tons and tons of silver. It’s no accident that silver is near $40, even though it has come down from $50 and you know what, Eric, it’s going to go through $50. Silver is going to go through $100 and people are going to say, ‘My gosh, silver is no longer a double digit commodity.’ Who knows how high it will go because it is vital for China’s industrialization and solar energy needs and it is also money....

“I hate to say this, I really hate to say it, but I think every family, every single investor in this world has to own precious metals and they should probably be the largest percentage weighting in their portfolio. I’m not talking 100%, but I am saying 20%, 30%, 40%, whatever you’re comfortable with.

One thing that is off the topic of gold, but convinces me that something is amiss in this world, we’re sitting here in the US with more than 9% unemployment. Participation rates in the labor force close to all-time lows or certainly post World War II lows.

Do I have to say what a mess Europe is with Greece collapsing, they are a certain default. Portugal and Spain are having problems, Italy was downgraded. Yet despite this, every critical commodity I can think of, even copper, which has been brutally hit, from copper, to silver, to gold, to oil, they are all in uptrends.

For oil, which is probably the biggest commodity in the world, Brent crude oil has been above $100 for a record number of days. Now go back to 2008, who would believe that? The entire Western world could not muster any growth at all in 2011, yet oil prices will have the highest average price ever this year.

So when you see commodities sustaining this massive uptrend, despite all of this turmoil and unemployment in the developed world, there is something wrong here. So in that environment is it so surprising that gold is so strongly bid?”