CHINA beats History Record of 44 Billions in Golden ETFs – The Eastern Smart Money Not Stop

[Igor Pereira]

Traders, while the West debate "reversions" and interest rates, the East continues draining the physical and financial metal market with a voracity never seen.

Newly released furnace data World Gold Council (WGC) confirm that Chinese demand is not only strong; it is historical. Below is the analysis of the flow of money that is supporting the price of Gold, even against Fed rhetoric.

By Igor Pereira Financial Market Analyst

The numbers don't lie. China's appetite for financial protection reached a new level in January.

• The Record: According to WGC, the Chinese market recorded a net inflow of 44 billion yuan in gold ETFs only in January.

• Magnitude: This is a historical record for a year's start. Never before, in the history of the Chinese market, so much capital migrated to gold ETFs so quickly in the first month of the year.

• ExpertFX Reading: This confirms our thesis of capital flight and mistrust in the local real estate/bank system. The Chinese investor is using any available vehicle (physical or ETF) to get off paper money and get into metal.

While China buys, Western analysts try to explain volatility.

• The debate: Experts (such as ATON) are dissecting what caused the January Rali and the subsequent technical "reversion".

• Factors: The market is being moved by a tug of war between Geopolitics (tires) and Fed decisions (bears)

• The Reality: The price "reversion" we have seen in recent days is a phenomenon of the paper market (future), driven by speeches from central banks. However, the floor the price is being built by these 44 billion real yuan that entered the market. It is difficult to collapse when there is a physical demand and ETFs of this magnitude absorbing the supply.

If China is buying billions on top or in correction, they are not "fashioning"; they are accumulating.

• Follow the Flow: When the world's largest buyer (China) accelerates purchases amid high prices, this signals that they expect severe currency devaluation or a greater conflict.

• Ignore Noise: The short-term volatility discussed in the webinars is irrelevant to the structural tendency of accumulation of the East.

The Chinese Smart Money is screaming that Gold is the only way out.

My Vision: The entry of 44 billion yuan in a single month is a sign of silent panic China. They're converting fiat into metal at any cost.

1. Support: This massive flow acts as a mattress for the price of gold. Aggressive falls will be bought quickly.

2. Strategy: If China thinks Gold is cheap at these levels, who are we to disagree? Continue to accumulate mainly the physicist.

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