Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

China Gold and Silver Strategy

Commodities / Gold and Silver 2012 Jul 24, 2012 - 04:24 AM GMT

By: Dr_Jeff_Lewis

Commodities

Best Financial Markets Analysis ArticleThe Chinese currency the Yuan is still pegged to the U.S. Dollar at a level that undervalues it substantially, provoking criticism of this exchange rate policy. The world still believes that China cannot survive and prosper without the West to fund its development, and so most analysts are focused on a hard landing for China.

Nevertheless, what is really happening is that new currency swaps are forming the backdrop of Chinese metals accumulation and production. In essence, China is gradually amassing the lion’s share of global wealth in the form of hard assets.


An amusing quote posted by Tyler Durden at ZeroHedge.com sums this situation up rather well:

"While the insolvent "developed world" is furiously fighting over who gets to pay the bill for 30 years of unsustainable debt accumulation and how to pretend that the modern 'crony capitalist for some and communist for others' system isn't one flap of a butterfly's wings away from full on collapse mode, China is slowly taking over the world's real assets".

China is Gradually Shifting the World Away From Using the U.S. Dollar

Recent headlines from around the world have focused on how China is spearheading a shift away from the U.S. Dollar as a reserve currency. Some articles on this topic from over the last year were entitled:

  • World's Second (China) and Third Largest (Japan) Economies to Bypass Dollar, Engage In Direct Currency Trade
  • China, Russia Drop Dollar In Bilateral Trade, China And Iran To Bypass Dollar, Plan Oil Barter System
  • India and Japan Sign New $15bn Currency Swap Agreement
  • Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says
  • India Joins Asian Dollar Exclusion Zone, Will Transact With Iran in Rupees
  • The USD Trap Is Closing: Dollar Exclusion Zone Crosses the Pacific as Brazil Signs China Currency Swap
  • Chile is Latest Country to Launch Renminbi Swaps and Settlement
  • Central Bank Pledges Financial Push in Africa
  • Yuan Spreading - China Creating Dollar Exclusion Zones

The movement first began in Asia, but then spread to South America, and now to Africa. These may seem like small steps, but the ultimate impact could well be a dramatic shift out of the U.S. Dollar. This will make it harder and harder for the United States to continue to sustain its twin deficits and fund its massive national debt.

China Encourages Precious Metal Ownership

Another important Chinese policy change has been to legalize precious metals ownership recently. Even silver ownership has been overtly encouraged by Chinese authorities.

In effect, by encouraging domestic hard asset ownership, this creates a third tier or leg of support for the accumulation of precious metals.

This means that China is becoming a global force in the import, production — and now the domestic ownership — of precious metals. China is already a major producer and importer of gold. The country was also a net exporter of silver, but it has now become a net importer of silver.

To further support the growing Chinese precious metals market, new metals exchanges are opening.

Could China be Considering a Metals Backed Currency?

While this shift in emphasis is incremental, it could easily reflect a strategic movement by China toward a new reserve currency that might be backed by gold or other precious metals. Silver has been used as an official currency in China before, dating back to the Han Dynasty that ruled from 206 BC to 220 AD.

Perceptually speaking, such a trend will initially be ignored and downplayed by both sides.

China would rather buy precious metals while their prices are low and unwind their massive U.S. Dollar positions without creating a market panic. Furthermore, to strengthen its funding position, the United States will continue to chant the strong Dollar mantra.

Nevertheless, as the official announcement of such an intention approaches and Chinese metals buying becomes increasingly evident, the affected precious metals market(s) will have little choice but to rally substantially.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

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 © 2012 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

6 Critical Money Making Rules