Last week, China announced they purchased a staggering 19 tons of gold in July. Does this disclosure finally reveal what they’ve been preparing for?
From L Todd Wood, for Birch Gold Group
Last week, the Chinese revealed that they had bought another 19 tons of gold. This comes on the heels of their first update in five years – just thirty days ago – when they announced that they had increased their disclosed holdings of the precious metal by about sixty percent. The long-awaited update from last month was expected; the announcement last week, however, was not.
With China’s recent manipulation of their stock market grabbing the headlines lately, the public has missed most of these announcements on gold. But they shouldn’t.
You need to be very aware of what is going on in China, as it could directly impact your portfolio and your well-being.
Following the news of China’s recent haul of gold, Bloomberg reported, “Most analysts expected the next report would take about five years, said Ross Norman, chief executive officer of Sharps Pixley Ltd., a London-based gold dealer. Instead, it happened in 29 days.”
We’ve speculated far and wide as to China’s true holdings of gold. Some believe they’re still not being fully transparent. But now, it seems as though they’re beginning to lift up the veil of secrecy.
The simple question: Why are the Chinese buying so much gold?
Beijing already has about two trillion dollars in foreign currency reserves. Shouldn’t that be enough? Shouldn’t they be comfortable with that many dollars on the books? Isn’t it enough for a rainy day? Let’s delve into these questions…
On Wall Street, they often refer to the “smart money” as those who always seem to be one step ahead of the rest of the world. You know, the ones who tell you on the day the market crashes that they sold everything the day before. These are investors that spend a lot of time looking at long-term macro events in an attempt to predict what may come. They seem to have this uncanny ability to discern long-term trends and foresee events that many cannot. Therefore, in short, they are the “smart money.”
The Chinese tend to mirror this technique, and have a long military and geopolitical history of playing the “long game.” The strategy involves sometimes losing a small battle in order to win the long-term war.
This is exactly what the Chinese are doing now with their gold holdings. They are loading up on the precious metal. They are preparing for the inevitable: The eventual collapse of the fiat money system, a monetary regime that relies on how much people “think” a unit of currency is worth – and not backed by anything of intrinsic value.
It could also be that the Chinese are finding out how difficult it is to “manage” an economy through manipulation. After all, throughout the history of mankind, it has never worked. So why would they think it could work now? Having a horde of gold in their bank vault gives the Chinese a cushion against all kinds of financial or social disasters.
Should you be playing the long game? Should you be following the “smart money”? Should you be hedging your bets against the ongoing decline of the U.S. Dollar? As a nation, we are approaching $20 trillion in sovereign debt, and on our way to $30 trillion. There is no end in sight, barring a radical shift in our monetary and fiscal policies.
The Chinese know something our government and Federal Reserve Bank simply can’t grasp. The Chinese know there is a storm coming and they are getting ready. Are you?
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