James Kar

Inflation vs. Deflation: What Are Investors Facing?

Hi Barking: I think the gold will keep going up gradually for 2 reasons: 1. as US dollar continue to fall, gold is an asset class has a negative correlation with the dollar. So, most investors will use gold to diversify the US dollar risk. 2. cultural demand - which has not been addressed enough. Both India and China consumers love to hold gold jewelry - not 12k or 14k, but in pure gold. As the middle class continues to grow, they have more money to buy gold jewelry, especially for Indians. They will buy gold when they have money and when the price starts to drop. So, I would say just the consumers in China and India can provide support in gold price so it will not drop too much from here. Of course, all bets are off when the global economy goes into deep recession, which I don't think it will happen.


On Jun 19 11:18 AM Barking wrote:

> James...how do you see gold doing in the above scenario?

Inflation vs. Deflation: What Are Investors Facing?

You are exactly correct. China needs to deal with the dollar situation very carefully. I think this is why China is gradually and slowly open up the capital market for RMB. Now, foreign firms can issue bonds in RMB for China expansion. Also, China starts to settle trade with its neighboring countries using RMB as well. This actually is more dangerous that people think. Because the changes are so slow and gradual, most people will not pay too much attention.


On Jun 19 12:58 PM daves1001 wrote:

> Yes, China is in a delicate position. Seems like their best strategy
> is to gradually wean themselves of investing in treasuries and hope
> that the dollar does not completely collapse before they have most
> of their eggs in other baskets.