Gold And Rocketing Chinese Growth

Chinese economic growth is probably the main driver of both physical gold demand and the global bull market in stocks. 

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I’m invested in China through ETFs, bank stocks, and… gold!

With the possible exception of HSBC, most analysts in the West appear to be underestimating the resilience of a billion Chinese citizens working maniacally in the private sector.

I’ll go even further than HSBC and predict that Chinese GDP growth could re-touch the 7% area if a trade deal is announced.

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The FXI-NYSE Chinese stock market ETF is breaking out of a powerful inverse H&S bottom pattern. The technical action fits with the growing GDP fundamentals, and key Chinese gold jewelry stocks are racing to fresh highs for the year. 

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While gold is doing extremely well so far in the weak demand season, a trade deal and/or a Chinese GDP surge could end this weak season earlier than usual.

Most big bank analysts see gold at $1400 or higher within 12 months. That $1400 price would turn many gold miners into gargantuan cash cows. Mining stock dividends would soar and make global money managers embrace the sector in a much more consistent way than they have in the past.

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If Chinese growth can reach the 7% area, Indian growth should reach 8%. India’s central bank has started its own gold buy program and all the silly government attacks on the Indian gold sector have ended.

Most gold analysts look for signs of a weakening global economy to propel gold higher. In contrast, I look for signs of strength in the private sector and signs of weakness in the US government sector. Both are present now.

The US government is a walking tombstone. Its debt cannot be paid. It’s a gargantuan glutton that is clearly out of control. The government and its central bank recklessly smash savers by demanding ultra-low rates and QE. It does so because its own grotesque appetite for borrowed money is insatiable.

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