Collapsing Global Economy, Imploding Financial System

Collapsing Global Economy, Imploding Financial System (Source globalresearch.ca) China is a huge importer of gold AND the largest producer of gold in the world.  NONE of their production ever leaves their borders.  I assume the number is 10,000 tons or more, this is a safe number in my mind.  I think it is also a safe bet to say the U.S. has sold a minimum of one half of “our” gold which would leave about 4,000 tons.  If this is the case, there is already a new world order where China has as much gold as numbers 2, 3 and 4.  Looking backwards in time, after the Bretton Woods agreement, the U.S. had every incentive to keep the “price” of gold down at $35.  This is so and evidenced by the old saying “it’s as good as gold”.  The saying originally came about as a description of the dollar.  As it turns out, the dollar was NOT as good as gold, in fact it was not as good as anything, even a cup of coffee.  The dollar was overprinted and abused (inflated) by politicians (the Fed) in order to hide anything and everything “bad”.  This worked until we hit the wall, let’s call this wall “debt saturation”.  Now, the process is reversing and will end in a massive deflation versus real money while fiat currencies follow their issuers into insolvency. Getting back to China, whenever they do make an announcement of how much gold they have, the yuan will appreciate greatly versus all fiat currencies. The Chinese are very smart people, they can see the West is hitting the debt wall.  They also know that as the wall is hit and markets begin to implode, their “customers” are going to have an even harder time buying Chinese produced goods.  In fact, they already know this.  They already know this is happening and can see it in their trade figures …which is why they recently formed the AIIB and are working feverishly to open the “old silk road” trade route!  They are simply lining up new customers from one end of the silk road to the other!

I have hypothesized many times in the past, China has built out their infrastructure and even “ghost cities” using credit.  Once the credit markets begin to default, they will be left with “stuff”, in place and will last for the next 50 to 100 years.  Roads, bridges, buildings, airports, ports, etc., you name it they have already built it.  And yes, their stock market will crash, their real estate market is already softening, in reverse and declining.  I am not saying it will be all rosy, to the contrary, there will be bankruptcies galore in China… with a caveat.  The “government” of China will go through this liquidation phase with the most gold in the world. Moving forward, since China will be hurt badly as investments default, I believe they will re price their gold higher initially.  I believe marking their gold higher in terms of yuan will be their only option.  They will be forced to in order to “recapitalize” themselves (and their banking system) and begin to fill in the black holes created by defaulted U.S. Treasuries and other “assets” held.  You see, not only is the old saying “he who owns the gold makes the rules” true, it is also true that he who owns the gold has the ability to PRICE IT. Let’s tie this all together and look at the old silk road and the trade route China is focusing on.  It goes from Asia, through the Middles East and into Europe.  Could this be why various European nations are repatriating their gold?  Not only because they have lost trust in their custodian but they also know China will put an emphasis on gold holdings in the future?  What do many Asians hold as money?  Yes, Gold.  Indians?  Gold.  Arabs?  Again gold.  The point I am trying to make is the “old silk road” might as well be called the “yellow brick road” and one paved with gold from beginning to end!  It seems to me, the only ones who don’t understand this or even disagree are Westerners and in particular, Americans.  Our standard of living is about to pulled right out from under us while violently proclaiming “it can never happen”.

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