"The current mood in China is certainly different to what it was earlier this year," says UBS upon returning from a fact-finding mission to the country to gauge gold demand. "The vast majority is not counting on the same level of appetite (for gold) as seen this year."
Part of the reason is an early Chinese New Year - meaning importers didn't wait for the calendar to turn before bringing in needed supply. But also there's classic deflationary pressure as buyers - used to recent price ranges - sit on their hands until a breakout to the downside occurs.
Separately, Axel Merk runs the numbers on the performance of a 70/30 portfolio - 70% in the S&P 500 and 30% in gold. Since 1971, it would have earned 9.8% annually, but with less volatility than owning the S&P alone (which rose an annualized 10.1%). By itself, gold gained 8.6% on an annualized basis.
"The takeaway should be that diversification with uncorrelated assets matters, as it is possible to substantially lower the volatility of a portfolio by adding an uncorrelated asset. That applies despite the fact that gold was more volatile than the S&P 500 since 1971," says Merk.
Precious metals are having a big session, gold +2.1% to $1,260 and silver +3% to $20.30.