China Gold USD

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YuanWe have mentioned in many previous posts that eventually the ultimate value of all fiat money is exactly zero. The operational word here being eventually. Up to this point, this was all futurecasting; playing with known truths and dusting crystal balls. This is no longer the case for the USD. China is making sure of it.

It is no secret that China has a deeply seated hatred for US, as most civilized (and many un-civilized) countries also have. And with very (excellent!) reasons.

The difference is that they are doing something revolutionary about it. They are taking small steps to ensure the demise of the USD. Those steps are now becoming more and more clear and what is more important, they are accelerating. There is no longer any doubt and no way to stop the upcoming change.


It is not absolutely clear what exactly is in the mind of Chinese leaders, but it had to do with gold, in a very big manner. Consider the following facts:


Step by step, China is undermining and making the USD obsolete. Consider these facts:


The US economy is one on the weakest in the world, and it weakness is based on the monstrous debt that they have accumulated (you can see the figures in our Special Projects section).

However, more importantly than debt is the unique position of the USD following the Bretton Wood agreements. The US can print almost as many USD's as they wish simply because other countries accept them as "assets". In other words, the US continually exports inflation.

However, all this is coming to an end. The Chinese are making sure of it.

As more and more countries switch to other currencies they will be demanding less and less USD's. This means that the US won't be able to export as many USD's as in the past. Which means that they won't be able to export inflation. Which means that the true historical printing volume of USD's will be revealed with devastating consequences. Can you say hyperinflation? Economic crash? Depression? No recovery?

All this spells gloom and doom for the USD and hence the US. This spells the dawn of a new power: China.


It is clear that the Chinese government is "out to get" the US (economically speaking), and by all measures so far they will be able to manage it. Which brings us back to Gold. What most so-called economic analysts keep saying is that China will never become a true economic power because its entire economy is based on the Yuan which is a fiat currency. Whoever, what if? What if the Yuan does not represent the Chinese end game? What if Gold represents the ultimate end game? If this would not be the case, why would China take all the physical Gold accumulation steps described above? Remember, as paper money begins to lose its value Gold's will begin to increase. For the Chinese (even traditionally) Gold is not a matter of "money" but a matter of "wealth". For Chinese people, Gold is only Gold if it is solid; all this "paper" Gold is only for "trading" but never for wealth. If this is indeed the Chinese end game, then this is indeed check mate. The USD is doomed.

As the Chinese curse goes, we will indeed see interesting times ahead for the USD.


We have mentioned in other articles our views on Gold. Buy gold. Most common coins. Store them. Forget about them. It would seem that this is indeed very sound advice for the times ahead of us. Interesting times indeed!

But then again, it is entirely your choice. Make it a good one.

Note: please see the Glossary if you are unfamiliar with certain words.