Gold Money

The story that commodities are at the centre of China’s shadow banking system has gained prominence in recent weeks.

This week gold fell from a high of $1390, achieved late on Sunday night European time, to a low of $1322 last night before rallying $15 on London’s opening this morning.

There is a fascinating story from Robert Peston, the BBC’s business editor about his interview with Hank Paulson, who was the US treasury secretary at the time of the Lehman crisis.

From last Friday’s close at $1322, gold opened strongly on Monday trading, as high as $1355 before losing two thirds of the rise on Tuesday.

Gold and silver extend their rallies amid escalating Chinese demand for gold

The China Gold Association this week released estimates for China’s “gold consumption” for 2013 at 1,176 tonnes.

Gold has now rallied over 10% since December 31. This, in the words of one analyst who achieved widespread publicity was meant to be “a slam-dunk sell”.

Since Monday financial markets have consolidated following the emerging market currency shocks of the previous week.

Thanks to the Fed’s tapering, a wider public is becoming aware of currency instability in diverse economies, from Turkey to Argentina, and India to Indonesia.

The second tapering reduction, a further $10bn per month, was announced this week. It was we are told by the news channels fully expected.