02 December 2010

Currency Wars: China's Gold Imports Soar 500% As the International Banks Pressure Their Markets

China seems to be encouraging gold and silver ownership amongst its people as a matter of policy, the better to cushion them against a bubble and collapse. This is also a means of diversifying their reserves without engaging the US and the fiat countries directly through more official actions with their banking reserves.

It also appears that the other BRIC countries are doing similar things as a response to a perception that rogue elements in the US and UK have co-opted the US financial system, and therefore the dollar reserve currency and the multinational banks for their own personal gain.  This has been previously seen in more select economic gambits, generally in the Third World, referred to colloquially as the work of the economic hitmen.

To that point, China Stock Crash Reportedly Caused By Bank Manipulation

I was also struck by this historical quote from a recent piece in the Financial Times by Tom Palley titled: Deaf to History's Rhyme: Why President Obama Is Failing.
“For 12 years this nation was afflicted with hear-nothing, see-nothing, do-nothing government. The nation looked to government but the government looked away. Nine mocking years with the golden calf and three long years with the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that government is best which is most indifferent.”

Franklin D. Roosevelt, October 1936
An indifferent government, one that is either lax or complicit with powerful private interests, is the ally of the frauds and schemes and abuses that proliferated over the last twenty years. But control frauds, being an unproductive transferal of wealth, are based on growth and new victims, and so the impulse to find new venues is strong by necessity as the old haunts are drained of their economic vitality.

The rhyme of history being what it is, the hard money versus soft money wars have not gone away and seem to be heating up.
From Goldcore:

"China's growing importance to the precious metal markets was underlined by the news that Chinese imports have surged by more than 500% due to increased investment demand. Incredibly, China's gold imports were five times higher in the first ten months than in the whole of last year. Imports hit 209 tonnes compared to 45 tonnes for all of 2009, according to the Shanghai Gold Exchange. Trading volume of gold on the exchange in the first 10 months rose 43 percent from a year earlier to 5,014.5 tonnes.

Chinese buyers are concerned about inflation and the depreciation of the fiat yuan/renminbi and looking to gold as a store of value. Chinese people do not have trust in paper currencies due to their experiences with authoritarian government and hyperinflation.

Most of the 1.3 billion people in China only began to acquire and own gold in 2003 as gold ownership was banned from 1945 to 2003. The gold market was liberalised in 2003 and their demand is increasing from a near zero base. This means that the increase in demand is very sustainable and will likely continue. Concerns of an overheating economy, inflation and a housing bubble will lead to further Chinese diversification into gold."
What I find most disturbing are the actions of the English speaking peoples, who seem to be falling in line and marching off at the direction of their handlers without any meaningful protest.