Quote from Kitco forum Here's another little known fact that I read in my friend, David Galland's, letter on Friday "during the last major precious-metals bull market in the 1970s, only about 10% of the world could own gold - either due to legal restrictions or a lack of liquid capital. Today, few countries prohibit gold ownership, and a far higher percentage of the world's population has transitioned out of poverty." So you see, the news from China that their domestic buying of Gold had outpaced India for the first time, plays well with the thought that the Chinese middle class is exploding and that 30 years ago, they were not allowed to buy Gold! And while we're talking about China, I keep making a big deal out of the fact that China has basically removed the relevancy of the dollar out of their trade (except with the U.S. of course) They have signed currency swap agreements with a number of countries, with rumors of signing even more When they sign these currency swap agreements, dollars are no longer used in the "terms of trade", and only the two currencies of the countries are used Well, strap yourself in, because now there are talks that China is readying the pen to sign agreements with S. Korea, and Japan With those two countries in hand, China would have wrapped up Asia and affectively removed the dollar as a clearing mechanism currency from trade in the region http://www.kitco.com/ind/Butler/may232011.html
It's good to see China taking steps towards removing their 'dependence' on USD but this is going to take a lot more than signing a few currency swaps unfortunately. The biggest problem lies in the fact that USD is the only currency used to trade for Oil and all the credit cards in the world do a conversion via USD. With the Yen in a position that is just as bad if not worse than the USD it makes no sense for China to ditch USD and go trade for Yen directly. Is there a source for this? The recent summit meeting between these 3 countries was a talk on Fukishima and how to avoid another one happening, not economic policy. I do recall China signing some treaty with Brazil, South Africa among others, which is interesting and should potentially pave the way for the end of over-reliance on USD. I'm surprised that China banned Gold for 30 years because Gold was something almost all the middle-class or above had in forms of Jewellery or watches. For example my grandparents had Gold necklaces and stuff like that. It was probably one of those bans that were 'in theory' but never really applied. Interesting times ahead although I'm not entirely sure that substituting USD with RMB is the best path to take considering the Chinese government has never really released reliable statistics on their M3 supply...
I think once China has removed the dollar as a clearing mechanism and relevancy of the dollar out of their trade, they can get rid of most of their US treasury holdings and float the Yuan without loosing 100s of billions on their reserve capital.
Its clear we are seeing the effect of HKME on gold as its rallied since the HKME opening, in effect bringing the more of the asian population to the market. As Bob Chapman said comex may start bleeding heavily from the trade HKME takes. The next one we all want to see is when they trade silver contracts
It was applied... they killed a great many people during those times... they wiped out the middle-class and above. Germany had Hitler, Russia had Stalin, Cambodia had Pol Pot, and China had Mao... fortunately times have changed. The current Communist govt is now swinging in the opposite direction; I see more free market capitalism in China than I do in the USA or Australia. Kinda weird, the USA and Australia have more market regulation as capitalist economies than China does as a communist economy.
