Market Watch: China Still Buying Gold, Interest Rates and Inflation

The demand for gold is still on the rise in China as its government continues to shift from using the precious metal as a basic commodity to treating it as a currency backer and a store of value. Chinese central banks are now in the top 10 global holders of gold, and even Chinese public financial advisors throughout the nation are moving consumer assets into the yellow metal. They have seen what we cannot: a propped-up U.S. dollar, over-stimulated markets and pending trade deals that could alter the course of equity markets and that of precious metals.

On our shores, equity investors are likely to move into other forms of investment soon as there has been no progress in the trade negotiations with China. This, along with the Federal Reserve’s aggressive position to continue to increase interest rates and

inflation, will likely cause some downward pressure on the equity markets as contrarian investors look for safe haven assets.

Meanwhile, gold is doing exactly what we hope and plan for it to do – counterbalance the equity markets. While it may lack fireworks, it protects other performers in clients’ portfolios, providing wealth insurance and an important hedge. More now than ever I have been encouraging my friends, who are mostly financial advisors like you, to create or add to their precious metal positions – before the election and before a major market shift – as it will prove to be one of the best ways to help diversify any portfolio.