Tuesday, April 5, 2011

J.P. Morgan Recommends People's Bank Of China Increase Gold Reserves

There are those who think that J.P. Morgan has an inordinate influence on U.S. politics and gold prices. As for its real level of global power, that may be put to the test. The banking firm is urging the People's Bank of China to increase its gold reserves, because gold has a lot of room to run.
J P Morgan China managing director Jin Ulrich, told Reuters, that it is not the end of the gold rally. Gold is seen as an alternative to paper currencies, she said. Increasing political uncertainties and rising prices would keep gold as a hedge.

"I don't think this is the end of the gold rally," Ulrich said. "Gold is seen as an alternative to paper currencies."

Ulrich said there is strong demand for gold from investors in China and that China has room to increase its gold reserves.

The remarks are interesting as shows that JP Morgan China is bullish on gold. JP Morgan have recently opened vaults for gold storage in Singapore.

This is where the story gets interesting. Morgan has a large short position on gold on the NYMEX, which it has explained as being counteracted by longs in other exchanges. Is this a case of a big firm in which the right hand doesn't know what the left hand is doing, or is Morgan pulling some sort of a sneak? Whatever the answer, the bank has discovered gold and is getting behind it in public.

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