If you think gold is near its top, you might not have taken this little tidbit into account.
China holds just 1.6 percent of its currency reserves in gold, compared to 70 percent by the U.S. and a 66 percent allocation by Germany, according to Credit Suisse. The Bank of Japan holds just 2.5 percent in bullion, notes the firm.
Foreign Exchange Gold Reserves
China 1.6%
Japan 2.5%
Germany 66%
U.S. 70%
Source: Credit Suisse
According to Andrew Garthwaite, Credit Suisse’s head of global equity if China and Japan were to put just 10 percent of their reserves in gold, the “increase in demand for gold would be 3 ½ times annual mine production.”
As a result Garthwaite, who sits on the firm’s global strategy team, expects gold to go higher and recommends buying gold stocks like Newmont Mining.
What's the trade?
Long gold has been the right trade for the last 10 years, says Joe Terranova, and I see no reason why that should change. In a world of competitive currency devaluation investors should own gold.
I would add a voice of caution, adds Tim Seymour. I don't think gold goes higher as investors are de-risking.
Fast Money Executive Producer writes about this trend at length in his latest post. Click here to check out China ‘Crazy’ Not to Increase Tiny Gold Reserves
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TRADER DISCLOSURE: ON JUNE 1, 2010, THE FOLLOWING STOCKS AND COMMODITIES MENTIONED OR INTENDED TO BE MENTIONED ON CNBC’S FAST MONEY WERE OWNED BY THE FAST MONEY TRADERS; SEYMOUR OWNS (AAPL), (BAC), (INTC), (MSFT); SCARAMUCCI OWNS (BAC), (C), (GS), (MSFT); SCARAMUCCI OWNS THE U.S. DOLLAR; FINERMAN'S FIRM OWNS (PM); FINERMAN OWNS (AAPL); FINERMAN’S FIRM OWNS (BAC) AND CALLS; FINERMAN’S FIRM (BAC) AND CALLS; FINERMAN OWNS (GOOG); FINERMAN OWNS (GS) CALLS; FINERMAN’S FIRM OWNS (HPQ); FINERMAN OWNS (HPQ); FINERMAN OWNS (IBM); FINERMAN’S FIRM OWNS (IBM; FINERMAN OWNS (JPM); FINERMAN’S FIRM OWNS (JPM) CALLS; FINERMAN OWNS (KFT); FINERMAN OWNS (RIG) OPTIONS; FINERMAN’S FIRM OWNS (RIG) OPTIONS; FINERMAN IS SHORT (IJR); FINERMAN IS SHORT (MDY); FINERMAN IS SHORT (IWM); FINERMAN OWNS S&P 500 PUT; TERRANOVA OWNS (SWN), (GLD), (IPSU), (RSX), (PFE), (TER), (APA), (AXP), (BMO), (BBY), (DIS), (XCO), (AAPL), (CVS), (IPI), (TEVA), (FXB); KELLY OWNS (FXE) CALLS; KELLY OWNS (IBM) CALLS; KELLY OWNS (STD) CALLS; GRASSO OWNS (ABK), (BP), (BAP), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ)
FOR ANTHONY SCARAMUCCI
SKYBRIDGE CAPITAL OWNS (BAC)
SKYBRIDGE CAPITAL OWNS (C)
SKYBRIDGE CAPITAL OWNS (GS)
SKYBRIDGE CAPITAL OWNS (MSFT)
SKYBRIDGE CAPITAL LONG THE U.S. DOLLAR
SCARAMUCCI OWNS (HPQ), SKYBRIDGE OWNS (HPQ)
FOR JOE TERRANOVA
TERRANOVA WORKS FOR (VRTS)
TERRANOVA IS CHIEF MARKET STRATEGIST OF VIRTUS INVESTMENT PARTNERS, LTD.
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (AMKR)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (IGE)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (DBV)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLB)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLV)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLP)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLY)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLI)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLU)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (DRYS)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (ALK)
VIRTUS INVESTMENT PARTNERS OWNS MORE THAN 1% OF (XLK)
FOR BRIAN KELLY
KANUNDRUM CAPITAL IS LONG THE U.S. DOLLAR
KANUNDRUM CAPITAL OWNS (GLD)
KANUNDRUM CAPITAL OWNS (AUY)
KANUNDRUM CAPITAL OWNS (GFI)
KANUNDRUM CAPITAL OWNS (IBM)
KANUNDRUM CAPITAL OWNS (FCX)
KANUNDRUM CAPITAL OWNS (CLF)
KANUNDRUM CAPITAL OWNS (TLT)
KANUNDRUM CAPITAL OWNS (STD)
KANUNDRUM CAPITAL IS SHORT THE EURO
KANUNDRUM CAPITAL IS SHORT THE YEN
KANUNDRUM CAPITAL IS SHORT THE SWISS FRANC
KANUNDRUM CAPITAL IS SHORT (EXPE)
KANUNDRUM CAPITAL IS SHORT (SU)
KANUNDRUM CAPITAL IS SHORT (IOC)
KANUNDRUM CAPITAL IS SHORT (XLI)
FOR STEVE GRASSO
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (AMR)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (BAX)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (CUBA)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (DHR)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (DYN)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (GERN)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (HSPO)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (MERC)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (NWS.A)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (NYX)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (PDE)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (PFE)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (PRST)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (RDC)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (SYMC)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (TLM)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (TRV)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (XRX)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (SDS)
STUART FRANKEL & CO. INC. AND ITS PARTNERS OWN (TBT)
STUART FRANKEL & CO. INC. AND ITS PARTNERS ARE SHORT (QQQQ)
FOR NIAMH ALEXANDER
KEEFE BRUYETTE & WOODS MAKES A MARKET IN (NDAQ)
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