China urges its citizens to buy gold - Uh oh look out!

Power to the people!

 

This could very well be the last call to buy gold on the cheap side folks. 

Good for China, but not so fast!  Don't think for one minute that the Chinese government is interested in turning more than a billion Chinese citizens into overnight millionaires. Heck no! 

China, being the world’s largest gold producer and second-largest consumer, is probably using its sizeable population purely as leverage to hike up the value of its gold reserves and help put the dollar out business.  China will probably continue to do so just long enough to secure its financial position and then crank it up a few notches higher to make the price of gold way out of reach for your average peasant.

Come on now, let's be real...who's going to work the fields otherwise?

American Eagle Gold Coin

Whether the official urging by the Chinese government for its citizens to buy precious metals is merely prudent, "fatherly" advise to its citizens, or part of a somewhat more sinister campaign the result will be the same: soaring precious metals prices indefinitely into the future.

With gold and silver having just broken-out above their summer trading ranges (the weakest season of the year for the precious metals market), precious metals appear poised for spectacular runs this fall, as I suggested a month ago (see "Two short-term scenarios for Gold Market"). Those who have continued waiting for cheaper prices have been shut out of this market (notably the price-conscious buyers in India), and the window for buying at current, bargain prices appears to be closing quickly.