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Will China Play The 'Gold Card'?
Submitted by Hugo Salinas Price via Plata.com,
Alasdair Macleod has posted an article at www.goldmoney.com which I think is important.
The thrust of the article is that China, at some point, will have to revalue gold in China; which means, in other words, that China will decide to devalue the Yuan against gold.
Since "mainstream economics" holds that gold is no longer important in world business, such a measure might be regarded as just an idiosyncrasy of Chinese thinking, and not politically significant, as would be a devaluation against the dollar, which is a no-no amongst the Central Bank community of the world.
However, as I understand the measure, it would be indeed world-shaking.
Here's how I see it:
Currently, the price of an ounce of gold in Shanghai is roughly 6.20 Yuan x $1084 Dollars = 6,721 Yuan.
Now suppose that China decides to revalue gold in China to 9408 Yuan per ounce: a devaluation of the Yuan of 40%, from 6721 to 9408 Yuan.
What would have to happen?
Importers around the world would immediately purchase physical gold at $1,084 Dollars an ounce, and ship it to Shanghai, where they would sell it for 9408 Yuan, where the price was formerly 6,721 Yuan.
The Chinese economy operates in Yuan and prices there would not be affected - at least not immediately - by the devaluation of the Yuan against gold.
Importers of Chinese goods would then be able to purchase 40% more goods for the same amount of Dollars they were paying before the devaluation of the Yuan against gold. What importer of Chinese goods could resist the temptation to purchase goods now so much cheaper? China would then consolidate its position as a great manufacturing power. Its languishing economy would recuperate spectacularly.
The purchase of physical gold would take off, no longer the activity of detested "gold-bugs", but an activity linked to making money, albeit fiat money. Inevitably, the price of physical gold in Dollars would separate from the price of the "paper gold" traded on Comex and go higher, leaving paper gold way behind in price.
If the US were to provide the market with physical gold in the quantities being purchased for trade with China, it might be able to prevent the rise in the price of gold in Dollars; however, we know that Comex has only one ounce of physical gold for every 124 owners of paper gold, so that action would be impossible. China would be sucking up the world's gold at a huge rate, if the price of gold in Dollars were to remain where it is at present.
The only way that the US might counter the Chinese move, would be to revalue gold in Dollars; which is to say, the US would have to effect a corresponding devaluation of the Dollar against gold, to nullify the effect of the Chinese devaluation of the Yuan against gold.
At a Dollar price of gold of $1,517 Dollars per ounce, the Chinese devaluation would be left without effect: the present Yuan/Dollar exchange rate would then remain at 6.20 Yuan per Dollar: 9,408 Yuan/6.20 exchange rate = $1,517 Dollars per ounce.
This is the old policy of the 1930's, commonly known as "beggar thy neighbor", where countries carried out competitive devaluations against gold in order to preserve their manufactures and continue exporting. The response of importing nations was to raise tariffs on imported goods. (Say good-bye to an integrated world economy.)
Will China decide to "beggar its neighbors", the US and Europe? I think that the huge problem of keeping the Chinese economy on its feet and avoiding the political instability which would rage through China by not doing so - with a population in excess of 1.3 billion human beings - will be so compelling that China will practically inevitably resort to raising the price of gold in China.
When might this happen?
The world economy is going from bad to worse by the day. The Chinese may opt for this measure out of sheer desperation, and it may be a reality soon. I have the sensation that things are falling apart around the world at an increasing rate of speed. Perhaps China will move this Fall?
Devaluing the Dollar on the part of the US would upset the apple-cart of Dollar hegemony in the world. But not to devalue would price US goods out of world markets, along with European goods. "Damned if you do, damned if you don't."
Dollar devaluation would force a Euro devaluation and all Hell would break loose, as all countries would belatedly realize the importance of having gold reserves, and one country after another would devalue their currencies against gold. Import tariffs and restrictions on imports would once again prevail. The dream of "Globalization based on the fiat dollar" would evaporate in the orgy of currency devaluations against gold.
The era of the Dollar as reserve currency of the world, would have ended.
When the dust shall have settled on this giant crisis, the powers of this world will have recognized, once again, that gold is money; what would remain would be the work of establishing the gold standard de jure, by international accords, in order to abolish tariffs and import restrictions and renew the free international flow of goods.
However, another horrible scenario is possible: the US, run by those who insist on maintaining the plan for world domination through endless war, may decide to go to war with China and with Russia, too, for good measure. Let us hope that reason prevails and that the Dollar loses its status as world reserve currency in a peaceful manner.
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Nope
More like the Gensler card where they let conscious manipulation of all commodities occur to their benefit... and stackers everywhere
"Let us hope that reason prevails"
you owe me a new keyboard...
they will eventually down the road
Nope, but they will do everything in their power to prop up their debt load.
Can anyone explain how exactly China would go about devaluing their yuans against only gold? (if that was in the story I missed it,because I rarely read analysis pieces of these Matrix markets we have now)
China could have 10000 tons of gold, but it wont matter. They are debt based like everyone else is.
First country to go gold standard sucks on a gun barrel.
Gresham's law, bitchez.
pods
Precisely why the answer is NO. Cognative dissonance much?
I was replying to the title story, fyi.
This revaluation would also bump phyzz silver up to nearly 21 bucks an ounce. Don't forget about silver, folks. And this would just be the start of the revaluation.
Once the Crimex is drained and goes bust the laws of true supply vs. demand will take on a whole new fucking meaning. Nobody is going to sell their phyzz for any amount of shitty fiat paper in any currency.
Price will go parabolic in a hurry and there will be no way for the Monkeys to fly out and hammer prices down with their bullshit paper derivatives in order to stop the surge.
Price will overshoot dramatcially and then come back down some after a while once some sort of equilibrium occurs and things settle down a bit. But where those prices settle at could still be multiples higher for silver and gold than where it is today.
By the time all fiat has been destroyed from the currency war and the dust settles...what price would you take for your phyzz? Who would want 50,000 dollars an ounce for gold if 50k couldn't even buy a shitty used car???
Remember the Weimar Germany chart as the Mark hyperinflated in terms of gold. The Germans sold gold for paper thinking they were rich. One day they had 100,000 Marks but in quick order 100,000 was worthless and gold sold for 500,000 then 1 Million, etc. Everyone who sold thought they were rich until the next day they were dirt poor again.
And they no longer had any gold or silver in their possession.
my dad's first job - this was in about 1960 - worked with this german bloke who said his mother entered a lottery in 1923, and won first division prize. At the time it was enough to buy a mansion, but it took 2 weeks to collect the prize and deposit the cheque in her bank.
By that time all she could afford was a good set of silver cutlery
Yup...well I can see that scenario happening all over again...only not just contained to one or a few countries like in the past. This time the entire world is completely based on fiat currency. This scenario has never happened in the history of the planet. That's why there's no way out except planetary mutually assured monetary destruction.
I'll also give about 99% chance of a nasty world war. They need to kill off at least a few billion of us "useless eaters", as the NWO scum like to call us.
Here's the Weimar gold mark chart I refer to.
https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic#/med...
Bill Holter report on China's deval move last night:
http://sgtreport.com/2015/08/guest-post-for-those-with-ears-to-listen/#m...
The PBOC can offer, thru the Shanghai Exchange,9480 Yuan per ounce of gold. This would have the effect of USD and EUR holders purchasing gold, for delivery, transporting it to China, selling it at the PBOC rate and exchanging the Yuan back to dollars and Eur at a 40% profit. Considering that Yuan can be freely "printed" by the PBOC at will but gold can not, the PBOC couldn't care less how much Yuan is in circulation. This would devalue their exports (in dollars) while having physical gold freely delivered to their shores.
The increased demand for physical, remember we are NOT talking about paper contracts here, would disconnect phys from paper price. It may "officially" remain the same but the "premiums" for physical would logically go up by 25-35%, depending on shipping charges, leaving a profit (in currency) for those who sell to China first.
China is an export nation. A strong Yuan is not to their benefit. They are also well aware that currency is not wealth.
China can do some arbitrage action with US treasuries, though. A gold move would strengthen the yuan, something they don't want.
Gold movement upwards will occur due to all the savers in the world not desiring to be lose purchasing power in the currency wars.
Article made sense to me.
Then you should keep that sack on your head.
Maybe they wont... But Jesus, I know where my next payckeck is going after I read this...
http://seekingalpha.com/article/3421396-the-big-long-goldman-sachs-and-h...
Classick Kansas City Shuffle if you ask me...
https://www.youtube.com/watch?v=ag31JHU8LPU
*Classic
NO. At least not until everything else and every other country/fiat collapses under it's own idiocracy. Read the "Art of War", the chinese are long term thinkers, not short term.
This whole Chinese "long term vs. short term" argument has got to go. When it's in the interest of China to do something long term they will do it long term. When it's in the interest of China to do something short term they will do it short term. Look at how quickly they decided to devalue their currency "last night". They did NOT plan this 1.9% devaluation 5 years ago.
China is poisoning their water and food supply to supply the West with plastic shit for conjured joobucks.
Not exactly thinking long term there.
pods
So what, they are in fact buying the rest of the world. The slave labor will stay in the polluted zones, but so what.
remember the love canal? Fuck, every industriallized nation is doing the same thing.
That is the problem. When things go bad, owning land or assets in another country will mean exactly nothing. The nation in which the assets reside still make the rules about immigration, visas, land use, etc.
Love Canal was actually a clay lined dump, where the barrels of waste were placed. The company that owned the land knew how bad it was. And it was operated in the 40's IIRC. Using the best knowledge of the time, that is what they did. They did not run a waste pipe out into the Niagra river and then say things were fine when it turned bright red, or had bubbles 10 feet high. This is currently going on in China, today. Do they not know any better? Seems scrubbers on coal plants would do them a bit better than having huge screens to remind the population what the sun looks like.
pods
Then show everyone the gold or shut the fuck up already. The point is that you will NOT be able to do such things and remain credible on a gold standard.
"reason prevails"
Not anymore.
My reasoning, your reasoning or their reasoning. Always the perspective.
you mean "England prevails"
https://www.youtube.com/watch?v=pzKqeG-KTEU
China may not play the gold card but its people can see the devaluations coming and should be buying gold to protect their wealth. Chinese stock market is only worth $8 trillion but Chinese real estate is worth considerably more than $100 trillion. Just the land value of Beijing was valued at about $20 trillion a few years ago.
All the available gold bullion in this world is worth $2.2 trillion. The Chinese and the Indians can see the currency devaluations coming and may decide to insure their wealth with gold and silver.
Jan 26, 2011
"According to the China Economic Weekly magazine, property prices are currently so high that the total value of land in Beijing, estimated at 130 trillion Chinese yuan (US$19.74 trillion), surpassed the United States' gross domestic product of US$14.5 trillion for 2010."
Patience and steps...
Shanghai Gold Exchange is preparing to declare an opposing new gold price by end of the year. If this destroys the London Fix, than all China has to do since they will be the primary physical market in the world is to re-price gold in relation to the amount of paper fiat printed (approx 30-60 times) and gold can easily handle backing global currencies.
Why do people always assume the gold price cant float, or be priced at a correct value in realtion to money supplies?
And it is interesting China does this devaluation a few days after the US backdoored the IMF to delay or cancel the RMB into the SDR.
http://www.examiner.com/article/imf-s-denial-of-china-into-sdr-will-lead-to-yuan-ending-dollar-domination-sooner
Dovie'andi se tovya sagain (It's time to toss the dice)
The Daily Economist
Funny that such a big item got so little press time?
Why the money honey's not into it?
gold is just a commodity on the modern era
there will NEVER again be a gold-backed currency
there will NEVER be a currency / monetary system that limits freedom of politicians to spend money, and create more money, to spend even more money, etc, etc, etc
NOT EVEN in China
The problem with this thinking is presuming that those in control of the levers can prevent political unrest forever. They can't, and history is full of examples of the elites fucking up a monetary system and paying the price. That's why your thinking is wrong.
History is FULL of rebellions against regimes.
The rebellers then become the NEW regime, that inevitably follows the same policies wrt money, ie
spend, borrow, create
spend, borrow, create
spend, borrow, create
til the next crash and next rebellion installs the next regime which then proceeds to
spend, borrow, create
spend, borrow, create
spend, borrow, create
You see the pattern ????
This is why in 10,000 years of civilization, there has *NEVER* been a regime that did NOT spend and debase and borrow and debase and crumble or crash.
Humans are too defective to manage their own societies effectively and with satbility long-term.
The only way China will maintain a stable economy is to plan for a gold based monetary system. With a population of 1.5 billion people the government cannot afford to allow a fly-by-night fiat, debt based currency to ruin them. If they continue with an irresponsible currency they can expect to see revolution.
And we know how responsible the Chinese are. Stewards of the land they are.
pods
As long as currencies are managed around exports then yes there will never be a gold backed currency.
Bring back Smoot-Hawley and really get this disaster up to speed......
"OT" but had to post..the funniest 3 minutes ever (Trump/Kelly)
https://www.youtube.com/watch?v=Io6B3AfG2HAVIDEO - Two Black Women GO OFF on Megyn Kelly In Epic Post Debate Rant
by Chan Akya @ http://www.atimes.com 8/11/15
"China Yuan devaluation: Let he who hasn't sinned.."'
http://atimes.com/2015/08/china-yuan-devaluation-let-he-who-hasnt-sinned/
Indeed, China will go to the "Gold Standard"! Period!!!
Gold is the only financial instrument for intrinsically nipping inflation/deflation in the bud. It's that fucking simple...[?]
Sure they will and The Fed will raise rates too.... ...someday.
lol, no matter when or where I see "raise rates" it makes me chuckle.
pods
Got gold?
It is absolutely ridiculous to imagine that China would go to a gold standard. Delusional actually.
A country that creates fake cities and throws people in jail for talking about any weakness and worries that anything less than 7% growth means social chaos and lies about it's numbers and makes selling stocks illegal..... they are going to adopt the spending limits of a gold standard?
Get real.
your joking,... right?
Exactly.
Milwaukee's Best me thinks.
I guess your reading comprehension is not so good. The article does not state that China will go to a gold standard, only that they will revalue the Yuan.
Russia has the new golden rouble as their FED symbol. I think they will make a play with gold
may be attractive @ 66 RUB per Dollar.
less debt than any country of 4200.00 per citizen and a depleting monetary base.
Unlike the growing dollar that the USA will print continuously.
reset time bitchezzz
I can't see a reason why any government would peg their fiat to gold. It takes away their ability to print money and spend.
Since the POG is determined in the 'market' (such as it is) how would China 'devalue' against gold? The currecny has no direct link to gold.
We could see the Shanghai POG rise but that would see arbitraged immediately, again in the gold market.
I'm just not sure what mechanism Alistair is seeing.
Right. When everything is relative, what difference does it make to devalue against any one thing. Devalue against gold but not the dollar, euro, or yen? Ludicrous.
FED will start buying Chinese Equities. The FED essentially props up everything else, so why not. One huge race to the bottom and God knows, the USA wants to be #1 in everything!
Never forget that China invented paper money. They KNOW how this story will end and are prepared for it. They are in no hurry.
Can't print pork.
The average Chinese person spends 50% of their income on food. When they pick up the pitchforks I'm guess TPTB will do almost anything to keep that wonderful communist dream going.
That's why China ecourages their population to buy gold.
Alistair's up on smoke...
He's fantacizing and getting paid for it under the table too - it's yet another gold bullion marketing trick to get you to buy.
If you buy gold, do it because you're sane and reasoned, not because the 'mother of all financial crises' is supposed to happen this October and you gotta rush into gold before it's too late.
I hate these hype marketing ploys designed to push the buttons of the unsuspecting....
Trouble is, it was Hugo Salinas Price who wrote this and he pumps silver, not gold.
"political instability" Under Communism, the instability is nipped in the bud. We do not know if China will impose Communist tactics against this instability caused by an economic downturn or not. You saw what happened in the USA a couple years ago, when economic and fiscal crisis caused some people to demonstrate! Obama set up a White House command post, and coordinated a joint nationwide take down of Occupy Movements. In a matter of hours, police all across America swept in and destroyed their camps and arrested anyone they could grab, pepper sprayed other, and tazered more. We in America accepted this as government's right. WOULD we accept the same as China's right? I bet we would not.
Obama, the nobel peace prize white man's n***a, used brute force to destroy economic protests in the free nation of America.
This is total nonsense. Why would the Chinese consumer continue to purchase gold at the suddenly higher price in yuan? What the Chinese are now doing instead makes much more sense. They are allowing the market to determine a decreasing value of the yuan against the dollar. A graceful, market-determined yuan depreciation would not be as open to demagogary. Although there would be no overt bump to the gold price, as rediculously postulated by the author, there would be a steady upward pressure, as consumers around the world again came to recognize that only gold is a currency that preserves purchasing power over time.
Another thought - the Chinese government has pursued a policy of encouraging their population to purchase and own gold. Suddenly raising the gold price would be counter to this long-standing policy. And if the Chinese central bank wants to purchase gold, the yuan price is irrelevant, since they have enormous dollar reserves that they can use to purchase as much gold as they want on the international market, and they can also purchase their own mined gold, since China is the world's largest gold mining country.
This is just another nail in the author's already suspect credibility. Read the publications of Koos Jenson instead!
This is just another nail in the author's already suspect credibility.
Suspect credibility? Really? The guy is a billionaire several times over - that gives him a lot of credibility in my book. He is part of the Club . . . .
Sounds like a wet dream.
-----
However... maybe we shouldn't discount something like this so easily. The SHTF has already begun, and history shows governments will take astounding actions when that happens.
So... this could happen.
But so could dozens of alternative scenarios, most of which are terrible.
Looks to me like they plan to play the gold card. After all they're advertising it.
http://www.sott.net/article/293427-Chinese-billboards-in-Thailand-herald...
as much as my PM holdings would just love this Gold Standard talk...it ain't gonna happen cuz TPTB wud crumble. What will happen is a basket consisting of crude, PM's some hybrid of currencies to further confuse things
I figure the price of gold is being beaten to shit to scare any more countries or entities who are thinking of repatriating the stuff.
That will backfire, at least I hope it does in my lifetime.......
Would you like to REVERSE your biological age, as my health regimen has done for me ( video (3½ min) and webpage – each leads to the other)?
You could then have a ring-side seat – even if it takes 50 years.
“the US… may decide to go to war with China and with Russia, too…”
Ah, there is a slight problem here; actually, a very big one.
China owns $1.5 to $2.0 trillion US Treasury securities; and for each dollar amount, China issued Yuan banknotes or bank reserves.
This makes war with China virtually impossible; for, by repudiating these securities, China’s currency would suffer a major devaluation. I mean if a 1.9% devaluation roils markets around the globe, what would happen with a devaluation of 40% to 60%? And, what would happen if China’s banking system lost the same percentage of its reserves?
Catastrophic… astronomical… system-destroying?
Oh, you say the US wouldn’t repudiate such debt because China possesses the Panama Canal? (Confessions, part 2 and Anatomy, part 2)
Sure, and – with China in turmoil, or its death bed – how long would it take a small squad of Marines to capture Panama?
All such talk of war with China, or Russia, is mere theater… makes it easier a) to impose confiscatory taxes… b) to send American male children off to be killed… and c) to impose martial law.
A more likely scenario is a first strike on the USA by Russia and China in response to increased aggression (both financially and militarily) by the US against those two countries. Granted, a lose lose scenario for all involved.
Wait, I thought the US Government was pricing its gold at 35$/oz?
Clearly we need to centralize further and create a one world currency backed by something of value that will eventually not be backed by value when the next Nixon comes along. People may disagree now but when the global economies are in ruin and currencies are collapsing left and right they may change their minds. One of many possible scenarios.
The currencies should be backed by something rare, like a No. 2 pencil.
I never have one of those when I need it.
End well, the 30's did not.
Likewise today.
End well, the 30's did not.
Likewise today.
Yeah buddy! They didn't have 1 to 10 megaton nuclear weapons in the 30's and 40's . . . . .
1 to 10 megatons?
If we're lucky. Given the evil that the US has become, I would think that at a minimum the Russians would have the good sense to prepare Tsar Bombas for the exceptional nation and its exceptional people.
Nope, the only way a bank maintains controls of its government and a government maintains controls of its citizenry, in the worlds largest confidence and ponzi scheme, is to start wars.
Every war was started by banks.
The only way this doesnt end in war is if the populus overthrows the banks and returns to sound money. This wont happen. The US already has its Article 1 Section 10 that congress and the Fed are violating.
When (2) U.S. carrier battle groups show up in the South/East China sea as part of an urgent issue of 'protecting Freedom & Democracy', I'll know this is on for real. Until then...
The US wouldn't be dumb enough to get their CBRs that close. CBRs are useless unless you are attacking defenseless nations like Libya or Iraq. A half hour after a real war with Russia or China starts, ALL of the CBRs in the US fleet will be on the bottom of the ocean along with their bottom of the high school class crews.
We're not at war with either country, and yet the US navy makes sure to keep their CBRs parked well east of the Philippines to keep them out of range of China's land based anti-ship missiles.
Just the mere display of 10,000+ tons of real, physical gold to the world, would be enough to send markets reeling and most likley, some sort of economic 'threat' or military action by the United States. No 'gold standard'. No 'revaluing'. No 'gold-backed currency' necessary. Just the act of revealing actual tonnage holdings, in real life for outside cameras and media to report. That act in and of itself is enough to end life as the average American has come to know it, in probably less than 180 days, if not much sooner.
Exellent post and right on the money!
Then who would they export their shit to?????? In other words, this is something they would not do under any circumstance other than an all out war.
This item makes several assumptions that do not correspond to actual conditions. Currently, gold is a store of value, but not a means of exchange or standard of value. It therefore does not currently qualify as money. If the Chinese govenment were to suddenly offer to buy gold at a much higher price in yuan, it would certainly acquire more gold in the short run. But it would also undermine China's efforts to demonstrate the stability of its currency. What's more, importers in other countries would not easily acquire gold to pay for Chinese export goods. They would need to use banks as intermediaries, and the world price of gold in these other currencies would quickly rise, thereby weakening the price advantage to importers. In other words, such an attempted manipulation would surely fail. I am confident that the Chinese authorities would not attempt such a scheme.
Thats the ULTIMATE nuclear option
And I think it needs to be done when satan amreeka and its evil allies are most vulnerable.
Mabbee at the time of next world war.
Yuan linked with $ => higher price of gold fixed
Rest of the gold goes to China
Dollar crashes
Euro , pound, yen crash
Amreeka & its allies attack middle east as well as all the gold holding nations
Nuclear war
Nobody wins
Live with the radiation
But btw whoso has most gold (read china & BRICS) ; becomes the supreme superpower
...hmmm
What happens if TPTB manipulate paper gold to $3,000/oz ?
With the Chinese revaluation as stated at around currently Fixed $1,500 / 9,500 yuan oz
Gold would flow out of China? Depending on how strong the Yuan-USD is.
Always comes back to currency to currency values.
TPTB could manipulate the value of the Yuan by playing with the Comex price of gold.
If 10,000 Yuan buys 1/oz and 1oz on the Comex is $5,000 USD then the Yuan has skyrocketed in value?