It’s important to watch what China does and not necessarily what China says. Today, China talks a good game about how much lower the gold price could go. But at the same time it is talking down gold on the global front it preparing for life after the US dollar by accumulating as much gold as possible.
What with the ascendency of Barack Obama to the presidency, the health care debacle, the uncertain domestic economy, climate-gate, various European debt crises, oil spills, and government bailouts and takeovers dominating the news… a very significant world monetary development is falling by the wayside…
The fact that China’s doing everything it can to aggregate the bulk of planet Earth’s gold inside its borders.
You won’t hear this anywhere in the mainstream media, but in just the last few years, the People’s Republic has made three major policy changes aimed at obtaining and keeping ever more of the world’s gold supplies.
• Secretly stockpiling gold — The People’s Republic now holds 30 times more gold than it did 20 years ago. Last spring, the head of China’s State Administration of Foreign Exchange (Hu Xiaolian) grudgingly conceded to the Xinhua News Agency that the nation had bolstered its gold supplies by more than 70% since 2003. And they’re nowhere near finished. The Vice General Secretary of the China Gold Association (Hou Huimin) advocates more than tripling China’s gold reserves to 5000 metric tons. That’s over $211 billion worth, in today’s prices.
• Lifting the moratorium on private precious metals ownership — For years, it was illegal for Chinese citizens to own raw gold or other precious metals. Recently, however, China’s government has reversed its position on private metals ownership, and is even strongly encouraging people in the People’s Republic to put at least 5% of their savings in gold and silver. They’ve even taken to the state-run media to promote this plan (it’s on YouTube), while staking Chinese banks with gold and silver bullion bars in four denominations.
• Strictly banning the export of gold bullion — Despite ranking around seventh in proven gold reserves, China has recently knocked off South Africa as the world’s largest gold mining nation, with more than 330 new gold mines extracting 110,000 tons of gold-bearing ore per day. Aside from things like finished jewelry, new government polices prohibit the export of ANY of this raw gold. It’s all staying in the country. China’s also eyeing up the world’s largest gold and copper deposit, in neighboring Mongolia. It just went online in October, according to Angel analyst Christian DeHaemer (here’s how he’s recommending you play it for up to 57 times your money).
Now, as I said before, not being an economist or any kind of bona-fide expert in money matters, I’m really not certain of all the ways in which China’s covert moves to corner as much of the world’s gold as they can is a dagger to the heart of the U.S. dollar…
I just know intuitively that an already-strong China growing ever more solvent and monetarily sound while the U.S. increasingly puts its faith into paper, It makes me want to go out and buy more gold immediately.