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In the current environment due diligence is critical.

Big Al
September 18, 2014

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Discussion
9 Comments
    Sep 18, 2014 18:33 AM

    Thanks Rhylin. Good sensible comments. It does just come down to basics and strategy most times. If institutional’s want out then they will just make the decision and that’s the end of it whether the assets outcome improves or not. And then it takes time to get back in after some careful analysis to determine if the sector has potential again. Right now gold just does not pay and nobody is interested in playing with the odds until these declines settle out and a real bottom forms. There could be a long period of time that passes before the bigger buyers decide the time is right It is risk free to wait until a little momentum builds.

      Sep 18, 2014 18:55 PM

      Not only should we question the track record of companies but I think if you are going to be interviewed about the market place what is your track record and who do you represent.

    Sep 18, 2014 18:51 AM

    This is slightly off topic but I think people are interested. I asked whether Shanghai Gold Exchange International Bourse include Silver this morning. It is actually does include silver as well as platinum and palladium.
    Link: http://www.cnforex.com/news/html/2014/5/20/6650fa4fa53064adae18b309c89878f3.html
    There have been talks by Vice President of Chinese Gold Association and Chairman of the Board of Shanghai Gold Exchange about why China opens the international exchange and bring international player into Chinese market. I think there are two reasons they have outlined:
    1. Acquire pricing power on precious metals and stop the strange pricing mechanism in which the buyers are in the East and price is set in the West. This has been a huge frustration for China since Shanghai exchange delivers more than 50% of the gold of the world but it has no pricing power. International society has ignored whatever it does. With international participation Shanghai Exchange will bring the price to be set in China gradually. This is the most they talk about – the single biggest issue.
    2. Protect Chinese investors and consumers. The leadership is tired of the fact that after Chinese consumers bought gold and gold keeps going down. This exchange is to facilitate the channel that people can put part of their wealth into gold to diversify their investment and wealth preservation strategies.
    They also mentioned several other reasons
    3. Internationalize RMB (Yuan)
    4. To promote gold instead of Internet currencies like bitcoin as the alternative investment.

    Link: http://finance.sina.com.cn/money/nmetal/20140314/112118509769.shtml
    However I cannot find the reasons why China pushes the schedule ahead. I can only speculate:
    1. Is it possible that the international participants like JPM and others will create some strategy to damage the opening of the exchange? This new schedule will make their attack ineffective. I know COMEX is setting up an exchange in HongKong later this year to compete with Shanghai.
    2. Is it possible that Chinese government will announce the new gold reserve number? Based on my understanding of Chinese government, they will not announce that they have purchased a lot of gold in the last few years. They will appear to be stupid and be fooled by foreign forces (as they put it). It is a big losing face issue. They have to get gold price in a reasonable level to announce their purchase.
    3. Is it possible they know there is end game going on in COMEX and LBMA? US and UK are trying to replace physical with paper by dumping large amount of contracts and default on them. If Shanghai is late, they may only be able to get paper. It will be very damaging to Chinese electronics industry if the silver runs out. China stands to lose the most if shortage starts by far.
    4. China will have a long holiday early October and it may delay the impact of the exchange by another half month. However, I don’t think it has that kind of urgency to make them change their original schedule. Push ahead of the opening can cause big problem for some participants since they are not ready.

    The above is pure speculation so I am not say yes or no. I don’t understand they artificially create chaos by moving the opening that much.

      Sep 18, 2014 18:27 PM

      Thanks Lawrence

        Sep 18, 2014 18:55 PM

        Thank for your platform. I will try not put too many off topic stuff.

        BWT, the second link is the Chairman of Board talks about the exchange. The title says: “Increase Chinese pricing power and compete with Wall Street”.

      Sep 18, 2014 18:11 PM

      Probably about 40% of them don’t understand the importance of due diligence. You what, make that 70%!

    Sep 18, 2014 18:21 PM

    In all fairness Al why do you interview this woman. Is she maybe involved in companies that are your sponsors, I think you must be transparent or you will lose credibility.