China’s Hidden Plan to Accumulate Gold

by Jim Rickards

China wanted to remain on a paper currency, one that is important enough to give it leverage over other countries. China accomplished this through increasing its voting power at the IMF and having the yuan included in the SDR basket.

China’s Hidden Plan to Accumulate GoldMeanwhile, the US gold reserve (market rate) is under 3% of GDP. For Russia, it’s about the same. For Europe, it’s over 4%.

In China, that number is about 0.7% officially. Unofficially, if you give them credit for having 4,000 tons, it raises them up to the US and Russian level. They want more, because their economy is still growing, even if it’s at a lower rate than before.

If you took the lid off gold, ended price manipulation and let gold find its level, China would be left in the dust. It wouldn’t have enough gold relative to other countries, and because the gold price would be skyrocketing, they could never acquire it fast enough. All the other countries would be on the bus, while the Chinese would be off.

When you have this reset, China’s the second largest economy in the world. They have to be on the bus. That’s why the global effort has been to keep the lid on the price of gold through manipulation.

There is so much instability in the system with derivatives and leverage that we’re not going to get from here to there. We’re not going to have a happy ending. The system’s going to collapse, and it will be a mad scramble to get gold.

Gold is still the safest asset, and every investor should have some in their portfolio. The price of gold will go significantly higher in the years ahead. But contrary to what you read in the blogs, gold won’t go higher because China is confronting the US or launching a gold-backed currency.

It will go higher when all central banks, China’s and the US’s included, confront the next global liquidity crisis, worse than the one in 2008, and individual citizens stampede into gold to preserve wealth in a world that has lost confidence in all central banks.

When that happens, physical gold may not be available at all. The time to build your personal gold reserve is now.


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