For the first time in history, the Chinese authorities have granted gold import licenses to two foreign banks operating in the country. ANZ and HSBC are the two nominated banks to receive gold import permits. The move is aimed at boosting gold supply into the country.
Critical minerals, uranium and precious metals are already in a supply shortfall, while Central Banks in Europe, Japan and the US continue to devalue their currencies through QE. These are ingredients for a price spike in several strategic commodities.
Gold fell initially in Asia before trading sideways and this range trading has continued in European trading. Gold edged higher Tuesday after hopes were dashed that Spain's bank bailout would be the panacea that would lead to alleviating the euro-zone debt crisis.
Increases in demand from China and India have driven a 7.5% increase in demand for gold jewelry during the first half of the year despite a 25% increase in the price. However, much of India's potential gold demand remains untapped.
Paulson's plan won't work. Leaders agreed to inject equity into the banking system, but too little, too late. Nothing short of a 5% increase in banks' equity capital (about $600 billion) will restore confidence. This article explains that even then, there are three additional problems. We need a plan that minimizes the bailout money so we'll have some for a stimulus package to restart the economy.