Protect Your Portfolio With Gold Denominated In Renminbi

by: Real Vision

Black Snow Capital founder Alexander Campbell foresees problems in the Chinese banking system leading to money-printing.

He likes buying gold denominated in renminbi to take advantage of possible Chinese capital flight.

As an alternative, he likes buying call spreads on the GLD ETF, with a long expiry.

There is huge potential for an outflow of capital from China’s banking system into gold, Black Snow Capital founder Alexander Campbell told viewers of Real Vision’s Trade Ideas.

Campbell sees China dealing with its internal banking issues by “bailing everybody out” and “printing money and papering over the problem.”

“There are 30 trillion of deposits in Chinese banks right now, and if just one in 10 of those RMB go into buying gold, that’s all of last year’s gold demand,” he said. “So we like gold denominated in RMB. You win on the gold if the US prints, and you win on the currency if China prints.”

An Alternative Trade

If investors don’t have access to gold denominated in RMB, Campbell likes buying call spreads on the GLD ETF, with a long expiry.

He added: “I don't think people should put their entire portfolio on this. This is the part of a portfolio which is protection. This is the part which is the cookie jar for when everything else is cracking and you get a little bit of a green on your screen, that makes your day a little better.”

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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