Sunday, September 20, 2009

Can China Affect Gold Prices?

1 oz (Troy ounce) of fine gold

Image via Wikipedia

The Chinese government has been advising its citizens to buy gold and silver. Typically, there is a large abyss between what the government wants and what the people actually do. However, in this case at least, it seems that the Chinese people are happy to be buying both these commodities. Until very, very recently possession of gold was an offense in China, punishable with confiscation and jail time. But this year, the government made it legal which has resulted in a surge in local Chinese demand.

The last thing the Chinese government wants is for the price of gold to collapse. Especially after having recommended that the people start buying it. So the question arises whether they can manipulate the price of gold if the need ever arose? Could the Chinese government increase the price of gold just by buying it?

Can China Affect Gold Prices?

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