China and international funds determine the course of events in the precious metals market.
“The recent rise in metal prices is caused by speculative actions. After some time, there will be a fall in prices”, – president of the company GeoProMining Roman Khudoliy said at a meeting to the reporters.
According to him, various funds have free cash now and hurry to put them in safe assets. “In the metals market in general, there are two major players. The first is China, acquiring resources, and the second is the funds that have available ready assets”, – said Khudoliy.
As he explained, the businessmen professionalized in the sale of metals, did not expect such rise in prices during the crisis. At the same time, there is a hidden trend of devaluation of dollar, for this reason the statements of the establishment of a new reserve currency became more frequent recently. In some countries dollar reserves are replaced by the euro, Russia and Kazakhstan are accumulating rubles.
“Under these circumstances, China’s actions are logical. This country has huge dollar reserves and is now saving up the gold resources. China previously resorted to such steps, but now China activated action, becoming the major buyer in the market of metal – said Khudoliy. – Businessmen involved in the sale of metal, now solve one problem – how to sell it. The market today is very limited, the only real buyer is China.”
Roman Khudoliy finds that the crisis for the industry has not yet ended. And the rise in price of precious metals does not mean that the demand for them actually increased. Turning to the price of gold, Khudolei noted that in any complex economic situation, investors consider gold the best way to protect capital and get down to buy gold.
“If you have a look at the jewelry market, where Europe and India are the major players, we see that these markets are marked by a severe recession, and to this day it has not been restored. That is, it is clear that in this case, investors view gold as a reserve asset. Then it is not posssible to say that the crisis has passed, and thus gold has risen in price.
The crisis will end when the real demand is restored, though it has not yet recovered”, – said Khudoliy. Moreover, he believes that the situation in the gold market indicates the investors’ expectations of a new wave of the crisis that prompts them to urgently transfer money into gold, which is always viewed as a more reliable means of storing capital. “When the world economy begins to recover, the price of gold will fall”, – concluded the president of the company GeoPromining.