There are a lot of theories being thrown around as to why China is acquiring so much gold. Everything from a failing economy to diversification are part of the media narrative.
I don't think it's primarily related to those or other assumptions, although the there is probably some truth to the diversification element of the story.
At bottom though, it appears China is positioning itself to enhance its currency, and make it much more desirable to the world, as the U.S. dollar continues to weaken because of the horrendous policies of the government and endless printing of U.S. dollars by the Federal Reserve.
With the U.S. dollar inevitably going the way of the British Pound, as far as being the reserve currency of the world, China, no doubt, wants to embrace that role with the renminbi.
This appears to be the reason the country is encouraging its citizens to acquire gold, and why it's importing so much even while it mines gold domestically at record levels.
China has a much longer timeframe than America and the West, and they'll be content to continually acquire gold in preparation for the eventual migration of the world to the renminbi as the reserve currency. It's only a matter of when, not if.
Showing posts with label Gold Reserve Currency. Show all posts
Showing posts with label Gold Reserve Currency. Show all posts
Monday, March 5, 2012
Saturday, May 8, 2010
Gold as Currency and Safe Haven
One of the more positive results of the economic crisis we face is abn increasing number of people are better understanding the overall scheme of economics, currencies, the central banks, and gold.
Gold prices today have risen to just under record levels, and that alone is good news, not just for gains made by investors, but because it reveals people in general are starting to see that historically gold has been the most durable asset that has existed; going back thousands of years.
But just as important is the understanding that the Federal Reserve and other central banks around the world are a major problem in the health of our economic system, and the endless printing of money by central banks had done as much harm to the global economy as anything else, and probably more.
Another great benefit is people are beginning to see that paper currencies aren't worth much, and gold is far more valuable and safe than it will ever be.
All of this is important because our generation, for the most part, haven't experienced this depth of economic chaos in their lifetimes, and it has brought to the surface the underlying causes which few have taken time to search out. Now they are, and it's doubtful it'll ever return to the naive practices of the past without being challenged.
Gold is safe because it holds its value and can be used as currency at any time, in the sense if things get so bad that the financial system breaks down, which it in reality could. This is why a growing number of people are acquiring physical gold to not only protect their wealth, but to have a means of exchange if things go that sour.
If nothing else, hopefully this crisis will change the understanding of our financial system and help people to see what needs to be changed after decades of Keynesianism has let us to where we are today.
Gold prices today have risen to just under record levels, and that alone is good news, not just for gains made by investors, but because it reveals people in general are starting to see that historically gold has been the most durable asset that has existed; going back thousands of years.
But just as important is the understanding that the Federal Reserve and other central banks around the world are a major problem in the health of our economic system, and the endless printing of money by central banks had done as much harm to the global economy as anything else, and probably more.
Another great benefit is people are beginning to see that paper currencies aren't worth much, and gold is far more valuable and safe than it will ever be.
All of this is important because our generation, for the most part, haven't experienced this depth of economic chaos in their lifetimes, and it has brought to the surface the underlying causes which few have taken time to search out. Now they are, and it's doubtful it'll ever return to the naive practices of the past without being challenged.
Gold is safe because it holds its value and can be used as currency at any time, in the sense if things get so bad that the financial system breaks down, which it in reality could. This is why a growing number of people are acquiring physical gold to not only protect their wealth, but to have a means of exchange if things go that sour.
If nothing else, hopefully this crisis will change the understanding of our financial system and help people to see what needs to be changed after decades of Keynesianism has let us to where we are today.
Thursday, April 15, 2010
Gold Going Up on Greek Concerns
Gold dipped earlier in the session but has rebounded to level off around $1,160 an ounce.
Even though Greece and other members of the EU made it look like the loans promised the country were only as a last resort, and reiterated they may not be needed, already Greece is saying there's a good possibility they'll have to apply for the loans, making investors jittery over the implications of the move, and what that may mean for other struggling countries in the EU, who without a doubt are poised to get their share of the money once Greece has received theirs.
But not only is the need for a rescue the main thing bothering investors, but whether or not it'll even be enough to keep the country going, as there has been little done to deal with the core problem of the issue, which is Greece and its mindset itself, which has spent far beyond its means to keep its socialist agenda going.
This is why gold is holding, and may be ready to run up again, depending on how believable a bailout of the country will be as to how long it will last and if it'll take hold.
Gold is increasingly being thought of as an alternative currency, and it will continue to strengthen against paper currencies, including the euro, and is being considered a place of safety equal to the U.S. dollar by many, as evidenced by its decoupling from the U.S. dollar in its usual inverse relationship.
Even though Greece and other members of the EU made it look like the loans promised the country were only as a last resort, and reiterated they may not be needed, already Greece is saying there's a good possibility they'll have to apply for the loans, making investors jittery over the implications of the move, and what that may mean for other struggling countries in the EU, who without a doubt are poised to get their share of the money once Greece has received theirs.
But not only is the need for a rescue the main thing bothering investors, but whether or not it'll even be enough to keep the country going, as there has been little done to deal with the core problem of the issue, which is Greece and its mindset itself, which has spent far beyond its means to keep its socialist agenda going.
This is why gold is holding, and may be ready to run up again, depending on how believable a bailout of the country will be as to how long it will last and if it'll take hold.
Gold is increasingly being thought of as an alternative currency, and it will continue to strengthen against paper currencies, including the euro, and is being considered a place of safety equal to the U.S. dollar by many, as evidenced by its decoupling from the U.S. dollar in its usual inverse relationship.
Friday, March 19, 2010
Gold Fighting for Reserve Currency Status
Gold being looked to as Reserve Currency!
There has been a lot of confusion form people commenting on reading stories about gold, as one day a headline will read gold goes up on Greek concerns, and the next day the same headline will be applied to the U.S. dollar.
The reason this is happening and there are paradoxical movements between gold and the U.S. dollar, and the two are the only two currencies in the world being considered as reserve currencies, with gold making a bold upward movement and people feeling better about the consistency and safety of gold than they do about the dollar.
As to why one day gold and the dollar go in the same direction and the next day they go in the usual inverse relationship they normally do, could be a reflection of the uncertainty as to which one will win out in the minds of investors.
Everything at this time as far as economic data is conflicting, and I think that's the same with most commodities and businesses as well.
One day prices of commodities are going up on demand and the next day they're going down on China tightening its money supply; it can't be both. So the uncertainty is written about by writers who for the most part, don't know what is going on, and pretty copy one another in their writing, while putting it into their own words.
While there are many factors related to the price of gold, including inflation, printing more paper money, safety, and geo-political concerns, I think what the Greek sovereign debt problem has unveiled is the inherent weakness in paper money to deal with the types of problems we're facing, and if just tiny Greece can bring this type of response, what would happen if Spain or even a major country defaults on their debt? It seems it would be unfixable, and the European Union and the euro probably wouldn't last (not that it would be a big deal in that sense).
What matters to most people is how this will impact their lives, and gold is the only proven type of currency out there that has been resilient over thousands of years. Silver could be a second one, but that's not solely a currency, although it could step up as one. But gold stands above all currency competitors, and is battling to regain its place as the choice of those looking for a sound and healthy currency.
There has been a lot of confusion form people commenting on reading stories about gold, as one day a headline will read gold goes up on Greek concerns, and the next day the same headline will be applied to the U.S. dollar.
The reason this is happening and there are paradoxical movements between gold and the U.S. dollar, and the two are the only two currencies in the world being considered as reserve currencies, with gold making a bold upward movement and people feeling better about the consistency and safety of gold than they do about the dollar.
As to why one day gold and the dollar go in the same direction and the next day they go in the usual inverse relationship they normally do, could be a reflection of the uncertainty as to which one will win out in the minds of investors.
Everything at this time as far as economic data is conflicting, and I think that's the same with most commodities and businesses as well.
One day prices of commodities are going up on demand and the next day they're going down on China tightening its money supply; it can't be both. So the uncertainty is written about by writers who for the most part, don't know what is going on, and pretty copy one another in their writing, while putting it into their own words.
While there are many factors related to the price of gold, including inflation, printing more paper money, safety, and geo-political concerns, I think what the Greek sovereign debt problem has unveiled is the inherent weakness in paper money to deal with the types of problems we're facing, and if just tiny Greece can bring this type of response, what would happen if Spain or even a major country defaults on their debt? It seems it would be unfixable, and the European Union and the euro probably wouldn't last (not that it would be a big deal in that sense).
What matters to most people is how this will impact their lives, and gold is the only proven type of currency out there that has been resilient over thousands of years. Silver could be a second one, but that's not solely a currency, although it could step up as one. But gold stands above all currency competitors, and is battling to regain its place as the choice of those looking for a sound and healthy currency.
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