Bloomberg Intelligence: Yuan devaluation salutary for gold - Video
Analyst at Bloomberg Intelligence is being interviewed by Kitco, as news from China keep dominating headlines Monday.
Ken Hoffman opines that sentiment in China continues to be bearish.
Everything is falling off a cliff...everything right now in China is in decrease mode, and we actually think their copper demand, for the first time in 30 years, will actually decline by 2-4%, analyst says.
The Asian nation shifts from an industrial-based economy to a more technology-based one, old businesses — such as steel, copper, cement — are going to be damaged. Hoffman also comments on the recent surprise move by the Chinese central bank to devalue its currency, the renminbi.
One of the primary targets for Beijing right now is to make its currency more global, Hoffman says noting that the weakening of the yuan is helping gold.
“If China is going to devalue its currency, that’s going to be very positive for gold demand in China, the world’s largest gold buyer,” he says. Speaking about the recent release of gold reserve holdings by the People’s Bank of China, he says even people in the country don’t believe the numbers that were released, as there is always a way central banks can kind of hide gold holdings.
In the meantime, he notes that gold continues to play a very important role in the country’s currency strategy. China still has a "strong and sincere interest in gold," he adds.
