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Gold & Silver, preparing for the next launch….to greater heights - China holding only 1.5% of its assets in gold
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Posted by ian 1 year 346 days ago (gold-eagle.com). Views: 101
Tags: china credit crsis gold |
| Related Tags: inflation finance investing commodities housing bubble peter schiff news |
Slower economic activity in the USA will spill over into other economies, resulting in lower tax revenues. Ironically this will coincide with increased government spending because of the various ‘safety nets’ have been put into place. Unfortunately, lower tax revenues combined with increased spending cause a geometric (not arithmetic) rise in budget deficits. We can therefore expect monetary inflation to continue for a long time.
The Chinese Central Bank in 1978 had 95% of its foreign reserves tied up in gold. Today, because of the rapid increase in its foreign reserves (much of it in US dollars), only 1.5% of its assets consist of gold. A number of highly placed officials are on record as stating that they would like to see a change, especially as they notice the decreasing value of the US dollar. Just a small switch on the part of Chinese bankers from dollars to gold will have a very positive impact on the gold price.
Although China is now the world’s top gold producer, it is nevertheless a ‘net’ importer! China is buying all of the gold its mines produce plus at least another 25 tonnes per year.
Compared to some other commodities, gold is lagging, and has a lot of potential to rise dramatically. Since the current bull market in commodities began in 2001, oil has risen over 1,000%; copper +500%; lead +600%; Molybdenum +1,100%; Uranium +600%, Platinum 550%; Rhodium +2,000%. Gold thus far has risen less than 400% during this seven year period.
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