Almost a year ago, we introduced a unique "worth pondering" idea for gold investors… the idea that China was guaranteeing your gains in gold investments.
Around this time, the Chinese government was in the headlines for encouraging its citizens to buy physical gold and silver. China has trillions of dollars of currency reserves… A tiny portion of this could be directed to supporting the gold price to ensure the government's "buy gold" recommendation was a good one. We called this situation a "whopper of a backstop" for gold.
Looking at the recent action in gold leaves us more and more convinced that Asian buying, led by China, has created a huge floor of support for the oldest form of "real wealth."
You see, gold typically goes through major corrections after extreme moves up, like those staged in late 2009 and early 2010. But as you can see from today's chart, gold is refusing to decline much after these recent rallies. Declines are now weak… and are met with a surge of buying interest. Much of that is coming from your "gold sponsors" in China.
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