What impact does China have on gold investments? Posted by James Randolph on December 15, 2010
The China syndrome.
December 15, 2010 – What impact does China have on gold investments? Read this lead-in to a Wall Street Journal article carefully: “Gold futures closed higher Monday after China opted not to raise interest rates, removing some concerns about an abrupt halt to global growth.”
Presumably China could singlehandedly shut down global economics – a possibility that is actually not so remote. Growth is occurring almost exclusively in emerging Asian economies, which owe their existence to China. And the Chinese economy, which many experts believe will eventually dominate the global market, is actually on shaky ground.
In China’s rush to modernization the country has invested 60% of its economy in fixed assets, and clearly that is not sustainable. As the country wrestles with inflation and lack of position in the global currency market, their stability is being severely challenged.
China knows it and world financial leaders know it. That is why China has broken with tradition and made their gold imports public, and have even announced their intent to surpass India as the world’s largest gold consumer. Infusing their economy with large stores of highly liquid physical assets will go a long way towards putting it on solid ground, and at the same time will provide them with a second currency that can readily be traded on global exchanges.
Gold is certain to be the keystone of the future global monetary system – there is no substance in an economy revived by printing mountains of cash. Our government needs to wake up and take notice of what is going on in emerging super economies, but as individual investors we don’t have sit back and wait for that to happen. We can build our wealth on the solid foundation of certified gold investments.
Senior Staff Writer – Certified Gold Exchange