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Thread: weekend commentary - China institutes law change with profound international impact

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    Default weekend commentary - China institutes law change with profound international impact

    admittedly this comes from a 'less than objective' source ... but the basic point is valid



    (snip)"The recent development of the Chinese government no longer restricting Gold and silver ownership and now actively promoting it is a very, very big deal (see article reporting this here and see this clip from Chinese television promoting silver - please remember that this item would not appear on Chinese television without explicit central government approval). To quote from the linked article:

    "The Chinese are being converted from being the lowest per capita [G]old consumers in the world to a nation of small precious metals investors. Now, by next year, Chinese consumption of [G]old is likely to exceed that of India, which has been for years the world's biggest [G]old market."

    (snip)"The development of the Chinese government actively encouraging physical precious metal investment is not just important because of the sheer physical demand this move will generate. It is also philosophically and politically important and is yet another sign post pointing to the end of U.S. Dollar hegemony for those who care to pay attention.

    A government with a fiat currency that is backed by nothing but paper promises should be trying to get its citizens to despise Gold! Gold is the enemy of fiat currency regimes and always has been. America has been taught that Gold investing is kooky or weird and for "end of the world" types. This mantra has been repeated by the mainstream financial community over and over and Americans, in aggregate, have been brainwashed to believe it.

    Why wouldn't the Chinese, who have an unbacked paper currency pegged to America's unbacked paper currency, promote saving money in Yuan to their people? Why wouldn't they tell their people how strong their banks are and how they can earn 5% or 10% on a long-term certificate of deposit? In short, why aren't they lying to their people about money as our government lies to us?

    There aren't many reasonable options for this conundrum. They all center around one theme: the Chinese government wants more Gold and silver within its borders. Why would it want that? What is the point of the central government promoting an investment class that creates very few jobs and has little prospect for immediately growing the Chinese economy?

    I believe China is preparing for a post-U.S. Dollar world and I believe they are planning to promote a precious metals backed currency in some form (whether their own or an international currency for trading purposes). I believe this is being done methodically and gradually by China and I believe it has grave long-term implications for the U.S. Dollar.

    Though not good for the U.S. Dollar, a return to sound currency on any scale is a welcome development in my mind. Gold is money. Gold is a check on spendthrift governments that insist on Keynesian insanity. Gold stands in the way of those who believe increasing the indebtedness of a country is a way to grow or stimulate anything besides debt and increased central bank power.

    While China has begun promoting real savings to their people, the United States continues to deny reality and promote toxic waste to its citizens, pretending that our Dollar is strong and our banking system is solvent. When demand for Gold and silver increases in the United States, our government conveniently stops making the retail coins they are legally bound to produce. The more popular these U.S. Mint coins become, the less our government wants to make them."(snip)


    The last sentence is a reference to the US mint repeatedly 'running out of' small denomination gold coins recently ... which in turn allowed US coin dealer stocks to be quickly exhausted and de-facto prevented would-be 'small investors' from being able to purchase physical gold in one ounce or smaller denominations. This in turn assures that only the 'rich' are able to buy physical gold ... given that the price of available 100 ounce bars is almost $100,000 each !

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    Default Re: weekend commentary - China institutes law change with profound international impa

    also, as Adelina pointed out in a different thread, the Chinese gov't just 'repatriated' all of it's Hong Kong international gold reserves to a newly built Vault facility on Chinese / Hong Kong soil ... and is 'encouraging' other Asian gov'ts to recall their own international gold reserves and place them in this newly built Vault as well !



    (snip)Martin Hennecke, a financial advisor with the Hong Kong-based Tyche Group Ltd., said that could be appealing to regional central banks unnerved after watching the global financial system teeter on verge of implosion last year.

    "Central banks are increasingly aware of the importance of having gold reserves at time of financial crisis and having it easily available at their own disposal," he said.

    Meanwhile, local newspaper reports said the Hong Kong Mercantile Exchange had signed an agreement to use the depository for its physical settlement and storage needs.

    Marketing efforts will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility, according to reports citing Raymond Lai, finance director with the Hong Kong Airport Authority.

    Efforts will also be made to reach out to commodity exchanges, banks, precious-metals refiners and ETF providers, the reports said."(snip)


    There are many possible explanations why the Chinese would choose to spend a huge amount of money constructing this new precious metals vault facility, to recall their own international gold reserves into this new vault facility and to offer the new vault facility's use to non-western governments for the recalling of their own international gold reserves. However, the 'tin foil hat' crowd would point out that by removing international gold reserves from western banks, Chinese and other Asian gov'ts can prevent the potential future seizure of those gold reserves by western gov'ts i.e. avoid a future replay of the gold reserve siezures that occurred during WW2 !

    ~
    Last edited by Melonie; 09-05-2009 at 02:52 AM.

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