Gold is a laggard today, falling $27 to $2630.
It's only a 1% drop and comes after a massive rally but it's worth considering gold right now in light of what's happening in China.
I've made this point a couple times in the past week or so: China has been the big buyer of gold this year. The central bank stopped buying in May (at least officially) but the torch was quickly picked up by retail. Gold volumes in China have been soaring.
When I wrote about the very simple case for buying gold in August, the basis of the trade was that Chinese investors had turned away from real estate and equities so gold was the winner, partly by default.
With the stimulus news last week and the huge equity rally, that could change. So do the people who have bought gold sell it and buy equities or real estate instead? I think there is plenty of money on the sidelines that could boost both and it's not just China buying gold but it's a point worth considering.
The good news for gold bulls is that the seasonals run very strong from November through January so any dip might be a buying opportunity, but I think it's worth waiting for a larger dip than this one.
