Saturday, February 12, 2011

Jim Chanos - China is a big construction site

Whilst I am not in total agreement with Jim, his view is compelling. At some point you must run out of people you can move from the Chinese countryside to the cities, and Chinese construction has been ahead of demand for many years, as previously reported in this blog here & here.

Relevance to Bullion:

If China does suffer a significant slump this will no doubt put downward pressure on the AUD$ causing bullion prices to rise in AUD$ terms. Also if the slump is prolonged it will cause lower base metal prices and mine closures, with 75% of mine supply silver coming from primary base metals mines this could cause supply side constraints in a already very tight silver market.


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