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China and its apparent economic downturn could in fact simply be a ploy. Find out why below.
China has always been a secretive government and yet we hear from them that their economy is struggling and we believe this openly.
China has been buying gold at a record rate and has always kept the exact amount being bought relatively secret by only revealing the figures once a year. (they owned 1,054 tons as of April 2015)
Its not hard to work out that if China fell into economic turmoil at a time when Greece is also struggling then the market value of gold would rise accordingly.
Looking at companies like Huntsworth who have recently (last few years) broke into the Chinese economy through Blue Focus, you would expect a reduction in contracts in that area. This is not the case and in fact HNT is thriving contrary to the obvious downside it should be facing in its aim of growth.
The fact is we can not fully know what state the Chinese economy is in and for all we know it is in fact thriving.
It is with this in mind I put it to you that China is in fact using their economy and its alleged downside as a tool to increase gold prices in which they would profit should they sell.
So what does this mean for investors.
Regardless of whether I am right or wrong, Gold is likely to suffer. If China is struggling they will be less bullish on gold as they will have less funds to buy with.
If China is playing the price of Gold then you would expect selling to occur and as such gold would again take a tumble.
I have always avoided gold companies anyway as I got stung once with AVM and know all to well the costs involved in extraction V the potential price you can get for the end product.
To be completely blunt, Gold companies are a red flag until gold recovers considerably, I wouldn’t even look at them until such time as gold is economical viable to extract and trust me that time is not now.
I fully expect that soon both the Greece and China problems will faze out but until they do you must understand that most shares will see more red days than blue. My new incentive #DayTradeMagic will aim to help people make money when everyone else is losing theirs.
You are all welcome to follow this new incentive via twitter @AKW_AIM and if you have any questions feel free to DM me.
All the best and I hope you all enjoyed this.
As always:
All in my opinion and not to be taken as fact nor advice.
Always seek professional advice before investing in any company.
