China Increasing Gold Reserves

2) Most of China's additions to its reserves likely began in the second half of 2008, when market talk of SAFE's gold buying first began to circulate.

3) China's SAFE has apparently been buying gold during the past two weeks.

4) Wall Street banks have been buying call options on gold futures, with at least one investment bank buying Comex calls, maturing in December 2009, at strike prices of $1,000/oz and $1,200/oz.

5) Most allocations of gold are zero, with most investors still thinking of short-term treasuries and dollar deposits "cash" (the least risky investment option).

6) Most gold demand is still being absorbed by the paper market, as shown by inflows into GLD and purchases of call options on gold. This will soon change.