Follow The Golden Dragon
by Curtis Hesler,
Forbes
Date: April 23, 2007
...It is now official. The great Chinese investment fund has been
established, and it is a whopper. They have announced that they will
hold $650 billion of their reserves at ready, and they will invest the
balance, along with $200 billion to $250 billion a year they expect to
receive hereafter...
What
will China buy? ...They will certainly spend a lion’s share on raw
materials and other commodities. This money will likely be the engine
that will fuel the next major leg in the commodity bull market.
China
will buy gold. They have every intention of being a significant player
on the global scene, and to do that they will need to increase their
gold reserves. Some experts estimate they will need to accumulate 2,000
to 3,000 tons of gold toward this goal. They will do this both directly
and indirectly, with a little help from the population, which is
enormous at some 1.3 billion souls. They have already legalized the
ownership of gold for their citizens, and the citizenry is eagerly
snapping up panda and “year of the pig” coins.
Consider this
possibility. As the Chinese government trades depreciating dollars and
other flat currencies they are forced to accept in their commercial
activities for gold, they encourage their citizens to do the
same--invest in gold. Then at some point when Western currencies are
teetering or in a serious crisis, China can pull their trump card. They
can call in the gold from the population (as Roosevelt did in 1933),
and they can use it (along with government reserves) to provide gold
backing for the yuan. They could suddenly end up with a highly
desirable world reserve currency...
I firmly expect to see gold eventually hit $1,600 and silver to triple from today’s price...
The above information has been redacted from the article as it originally appeared on Forbes.com on April 23, 2007.
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