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.
Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors (collectively, “Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise (whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance. Well that was pretty intense! We hope you got all of that - now stop reading the small print and go and enjoy Real Vision.