How To Mimic China’s Profitable Gold Strategy
When you have a fortune at your disposal (like Li Ka-Shing or Bill Gates) buying up physical commodities is completely unrealistic. They might be able to buy a few pallets of gold, but then what? With the next commodity boom, the smart money is going to flood into the businesses that own these assets; it will go into those that own minerals in the ground by the ton.
The dollar has rallied greatly as of late, but that’s not because anything has improved with the U.S. In fact, it’s just the opposite; the national debt for the U.S. is nearing $20 trillion! What has benefited the U.S. dollar is global uncertainty. Essentially, the dollar is the tallest midget in the room when it comes to paper money. This is why I see hard assets like gold, silver, oil, uranium, and copper soaring against the dollar one day.
Gold Is Rallying Worldwide, Even to All-Time Highs
What has gone largely unnoticed, is a big rally in most major currencies. Also, with the strength in the dollar, several other currencies have suffered largely, resulting in much higher gold prices in those currencies. Take for instance the following trends since last summer:
- The Russian ruble collapsed, and gold soared.
- At the same time the euro was almost in a free fall earlier this year, gold rallied big!
- And when the Swiss central bank decided to devalue their currency with negative rates, gold spiked in francs.
- Another great example is Brazil which has seen gold in its local currency rally to near all-time highs.
Gold is the only true hedge against these central bankers, and it is responding to the fiat currency war.
Gold tends to have a direct response for central banks who give their local citizens discomfort in the value of their currency, but
- What happens when the central bank is managing the currency of choice for the entire world?
- What happens when the entire world wants to exchange their U.S. dollars for gold?
It could be either because of an action the Federal Reserve takes or because the U.S. debt passes a key psychological number with the markets, like $20 trillion which is likely to happen in 2017. China and Russia are piling up gold for several years now. China, by the way, is both the world’s largest gold producer and biggest importer, so not only are they accumulating gold by the truck load, not one ounce produced is leaving their shore.
It is clear that China is preparing for something big in the currency markets. Last year, China partnered with Brazil, Russia, and South Africa to form a competing bank to the World Bank, which is controlled by the west. Since 2008, half a trillion has been agreed to in currency swaps with nearly 30 countries. The world has an unease about the dollar system, with Russian President Vladimir Putin going as far as saying the dollar monopoly is damaging to the Russian economy. President Hu, of China, said last year that the “dollar is a product of the past.”