Jun 20, 2017
- After the US markets close today, Morgan Stanley will announce whether Chinese stocks get the green light for inclusion in their emerging market index.
- Please click here now. This announcement has the potential to create substantial international liquidity flows into Chinese stocks.
- That can have a very positive effect on the price of gold. Here’s why: Gold plays a huge role in Chinese culture. When the citizens are happy or in the mood to celebrate, they buy gold.
- For most of 2017, the Chinese stock market has left the US market in the dust, and today’s announcement could add even more zest to the rally.
- Please click here now. Double-click to enlarge this FXI chart (a Chinese stock market ETF).
- It’s clear that even without inclusion in the Morgan Stanley indexes, the Chinese stock market is roaring higher. Note the bullish island reversal pattern that is in play now.
- The Chinese gold market (especially the market for investment grade bars of gold) is recovering in step with the new bull cycle in Chinese stocks.
- Please click here now. Double-click to enlarge this daily gold chart. I realize that gold market investors are a bit disappointed that gold hasn’t surged above $1300 in 2017, but good things come to those with patience.