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Gold Soars After Chinese Currency Devaluation

Gold Soars After Chinese Currency Devaluation

Gold Soars After Chinese Currency Devaluation

Yesterday, immediately in the aftermath of the PBOC’s dramatic devaluation announcement, we remarked the following:

To be sure, while it will take the Chinese mainland a few more hours to realize just what happened, and that once you unleash the devaluation genie in a global currency war you can’t simply put it back in, which means over one billion Chinese will soon be scrambling to preserve their purchasing power (but not in the stock market which particular bubble burst just last month and taught millions a very harsh lesson in get rich quick schemes), some fast thinkers realized that not only will capital outflows explode in the coming weeks and months, but that holding one’s savings in Yuan will be, well, foolish.

As a result, after initially tumbling for some inexplicable reason after the PBOC announcement, gold is now soaring back to levels from mid-July and going higher.

Here we eagerly await as the BIS’ Benoit Gilson sells a few billion in paper gold just to reset the price of gold lower as a surge in gold, and a loss of faith in paper money, at this juncture in just broken out global currency wars, is the last thing the central banks’ central bank can afford.

But wait, there’s more: because any day now the PBOC will update its revised foreign reserve and gold holdings. And so the next big leg up in gold will take place when it is revealed that the PBOC had only exposed a portion of its “new” total gold inventory, and that with every passing month it will simply reveal more and more as central-planning conditions demand it.



Courtesy: Zerohedge

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