Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
BREWING FINANCIAL CRISIS 2.0 Suggests RECESSION 2022 - 28th Jan 22
Financial Stocks Sector ETF XLF $37.50 Continues To Present Opportunities - 28th Jan 22
Stock Market Rushing Headlong - 28th Jan 22
The right way to play Climate Change Investing (not green energy stocks) - 28th Jan 22
Why Most Investors LOST Money by Investing in ARK FUNDS - 27th Jan 22
The “play-to-earn” trend taking the crypto world by storm - 27th Jan 22
Quantum AI Stocks Investing Priority - 26th Jan 22
Is Everyone Going To Be Right About This Stocks Bear Market?- 26th Jan 22
Stock Market Glass Half Empty or Half Full? - 26th Jan 22
Stock Market Quoted As Saying 'The Reports Of My Demise Are Greatly Exaggerated' - 26th Jan 22
The Synthetic Dividend Option To Generate Profits - 26th Jan 22
The Beginner's Guide to Credit Repair - 26th Jan 22
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China Sets Stage for Vacuuming World's Silver

Commodities / Gold and Silver 2011 Jan 12, 2011 - 12:29 PM GMT

By: Dr_Jeff_Lewis

Commodities

China's monetary policy is increasingly a main driver of gold and silver prices because so many Chinese can now afford metal investments and are willing to snap them up. 

Recently, though, China took one of the most aggressive steps to take control of the 2011 silver supply.  This year, China anticipates it will allow its currency to advance some 5% against the dollar after previously allowing for only a 3.6% advance in 2010.  Such a massive increase, many believe, could tip the metals scale.


Why the Currency Matters

As the Chinese newspaper that first published the report admitted, any increase in the value of the yuan is a de facto decrease in commodities prices.  Thus, each 5% uptick in the Renminbi is the inverse decrease of 4.77% in actual commodity prices.  In addition, if the trend continues, that would imply that ordinary investors and speculators, alongside collectors and savers, would drive rising demand – and rising prices.

Through the first three quarters of 2010, Chinese silver exports were effectively shut off, nose diving by nearly 60%, indicative of a shifting preference for hard assets.  Gold exports were nulled, and in fact, the balance turned further to the side of imports, with gold imports advancing some 500% through October.  That shift, many believe, is here to stay and will not stagnate, but instead see future growth as China's purchasing power rises.

Monetary Irony

The fact of the matter is simple: both the United States, and by some measures, China, are inflating their currencies to their limits.  In the United States, we've seen two quantitative easing programs on top of zero interest rate policy for many years, both pre- and post-financial crisis. 

In China, the excess capital derived from their massive export economy is affecting domestic inflation, but is also paving the way for a rising middle class (consumption), and possessing such an undervalued currency leaves open the ability to revalue the Renminbi without cooling their own growth.

The difference between these two countries, though, is that China can afford to both inflate its currency and yet still allow it to rise against the US dollar, giving it a very privileged entrance into the pool for commodities that hasn't been seen since the United States, in a military agreement with Saudi Arabia, cornered the market for oil.

Mainstream Getting Behind the Movement

The mainstream media is increasingly bullish on commodities, particularly monetary metals, in an absolute reversal from their 2009-2010 headlines and hit pieces. 

While some in the media are still pointing the finger towards a bubble, there really isn't much bubble to be found.  Even without hyperinflation or vast changes in currency values, there will be, in the next many years to come, billions of people lifted from poverty to wealth and productivity. 

What happens when these people, many of whom have experienced (relative) conditions much like the United States' “Greatest Generation,” decides to invest?  They're going to seek safe haven investments, and there is no better safe haven than the limited stores of precious metals. 

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in