China Lifecos are already on the bid in gold. The Shanghai Gold Exchange has admitted four Chinese life insurance companies as exchange members, allowing them to buy gold as part of a pilot program that could expand the network of gold buyers and create a massive new buying impulse, notes TDS Senior Commodity Strategist Daniel Ghali.
"These four lifecos alone have nearly 13 trillion yuan in total assets and represent nearly 2/3 of the total potential buying impulse from this pilot program. We estimate that a 1% allocation to gold equates to about $17.8 billion in new fund inflows, or about 183 tons (5.9 million tonnes)."
"This could represent a massive buying impulse, equivalent to roughly half of the average annual global official central bank purchases over the past five years. While there is no timeline associated with building this allocation, these entities have demonstrated an interest in doing so, having reported their first such purchase within the first trading session of their membership."
"In today's market context, which already features a near-perfect inverse correlation between two of gold's major buying cohorts, this could add another element to the asymmetry that benefits prices. Conversely, the downside is limited by the much smaller scale of macro fund positioning. Expect more FOMO from the funds ahead as prices continue to rally north of $3000/oz.