The second thing I want to make KWN readers aware of is the report which was commissioned by the World Gold Council. This is an incredible document, especially coming from the World Gold Council because it's basically saying that the Chinese are going to back their currency with gold. This would, in turn, displace the US dollar and make the Chinese yuan the world's reserve currency.


The Chinese are sitting on piles of dollars right now, and while the US continues its decline, the reality is that all of the fiat currencies are in a race to the bottom. We just saw the Bank of Japan yesterday talk about opening up QE and printing vast sums of money. This will be an attempt to reverse their deflation with inflation. This move by the Japanese is very, very bullish for gold.

are you serious bane

are you serious bane

Talk is cheap.

Back in 1620s or so there was a ruler in Saxony. He made several rules. Rule 1 was that his paper currency was equal to his silver coins. Rule 2 was that it was illegal to exchange paper currency for the silver coins. Naturally he paid for goods and services with paper. So technically the paper was backed by silver, but reality was that there was no silver. The result was that paper currency sunk.

There's no doubt China has been stockpiling gold. People have theorized they were planning on backing the yuan with it, but this would be the first confirmation.

Russia and China already dropped the USD as the reserve currency a couple years back, so they have at least one other country already ready to adopt it, and have been planning something like this for at least that long.

Recently Germany demanded 300 tons of gold back from the US, too. So they may know something is about to go down. We'd be the last to find out, especially if you're waiting for the TV to tell you what is happening.

The main problem, as it was explained to me, is that most everyone does not actually have enough precious metals to fully back their currency. Meaning, lets say one Yuan is one gram of gold. How many Yuans are in circulation? Billions? Trillions? Does China have billions or trillions of grams of gold?

If Germany is serious about that 300 tons of gold, do you know what that means? It means that Germany making plans to leave EU. Now. How big of a disaster would that be? A Very BIG Disaster, for Western Europe. You peeps in EU better start stocking up on canned food and water purification tablets.

There's somewhere between 175k and 300k metric tons of refined gold in the world right now ... .

First off China wouldn't allow the Yuan appreciate greatly relative to the USD as that would decimate their manufacturing sector, the bedrock of their economy.

There's somewhere between 175k and 300k metric tons of refined gold in the world right now (a lot of it is "finely distributed" and/or hidden away and so on), with a bit under 2k more put into circulation on a yearly basis.
Gold price is somewhere around 1.7k USD per troy ounce right now, so that makes one metric ton worth a bit under 55 million dollars right now, but let's highball it at 60 million tops.
So that means that the total amount of gold that exists would be worth between 9.6 and 18 trillion USD.
The entirety of the gold that exists in the entire world might not even cover the current deficit the USA has.

The 300 metric tons withdrawal request by the Germans would therefore might represent a mere 0.1% of what gold exists, and a paltry total value of 16.4 billion dollars. Not trillions, but "merely" billions.

In a similar line of ideas, there's about 5 trillion yuans in circulation as paper money (M0), worth about 0.8 trillion USD at the current exchange rates. On the USD side, there's roughly about 0.9 trillion USD in paper money (M0), which is comparable to the amount of yuans in circulation. In the EU, there's less than 0.7 trillion EUR in M0, worth about 0.9 trillion USD at the current exchange rates. As you can see, all of those currencies have a pure paper total that's quite similar at our current exchange rates.
The USA has about 8k metric tons of gold in acknowledged official reserves, China has about 1k metric tons of gold, whereas the EU has over 10k metric tons.
It seems fairly trivial to conclude that the EU and to a slightly smaller degree the USA would have it much easier to back their currencies with gold rather than China.
The EU and USA are "leveraging" their gold reserves at about a 1.5:1 to 2:1 ratio, while China does it at a 13:1 ratio. China would need to bulk up their gold reserves like mad to get close to the same ratios.
I have a hard time swallowing the idea that China would gold-back their currency, but the USA nor the EU would in response, considering it would be easier for those two.

Of course, the issue is that the M0 of just about any currency is fairly inconsequential thanks to fractional reserve banking, with the grand total M3/M4 virtual money supply easily being at least 10 times higher than M0, often noticeably higher than that. There's not enough gold in the entire world to back many of those currencies' accumulated numbers at 1:1 ratios at the current valuations, let alone gold in those countries' official reserves.

The Chinese could become powerful, but right now they are a paper tiger and they can't bootstrap their economy at the previous pace while their cashcow cheap labour is idling.

[
If Germany is serious about that 300 tons of gold, do you know what that means? It means that Germany making plans to leave EU. Now. How big of a disaster would that be? A Very BIG Disaster, for Western Europe. You peeps in EU better start stocking up on canned food and water purification tablets.

It's now been confirmed that China is going to back the Yuan with gold.



For years now i've remained quiet as people claim the USD is about to collapse, but there's no way this can turn out well. Our only hope is that he's outright lying about the World Gold Council Document saying that, but if he's not it's time to panic.

the US has one of, if not the, largest gold stockpile in the world

Had a similar argument with someone awhile back on another forum, and they called China a paper tiger because it lacked force projection. Saw this just today. In a couple months they'll have dozens of those. When you've got the largest manufacturing base in the world you can make things happen fast, and payment of workers is optional. I wouldn't dismiss them so easily.

With the overly provocative North Korean nuke tests not long ago on top of that new Chinese troop transport, you have to wonder if there's even more to this.

Theory tiem:

Maybe they're going to destabilize the economy first, then swoop in with nukes and troops amid the chaos. China wants land badly, and if this is to be believed, they've got the US in their sights.

Russia is right across the Amur River... no need for fancy Navy, no need for fancy aircraft, just drive across and you got land, oil, gas, timber, coal, iron. Much easier! Gÿ¦

Germany tried to invade Russia during WWII, and lost 75%- 80% of their total casualties in the war on that front.

Russia is also their strongest ally. The top 4 military forces in the world are China, Russia, the US, and North Korea. Guess who is allied, and who is the odd man out. Majority of US forces are currently spread all over the globe, too, unlike Russia.

soo.... this means that all the economic doom and gloom hypothesized here is just that?

Largest if you consider a single country, if you consider the USA a single country as opposed to a collection of states, and if you don't consider the EU a country but a collection of countries (otherwise the USA stockpile would be the second largest, with the EU countries' combined stockpiles being number one).

Maybe the golds not there?

There has been people saying theres no gold in fort knox for years.

This doesn't seem to me to be another crazy conspiracy theory, they do have some solid reasoning behind
it. But basically this all goes way back when the US made it illegal to own gold and confiscated it all.

Which if you think about it, is kind of suspicious.

Personally I won't believe theres gold there until a totally independent audit confirms it's existence.

Who cares about gold. North Korea is ready to test its 3rd nuclear weapon.

Well, considering how great their rockets fly, that and a metric truckload of luck just might make them able to score a handful of hits (or probably at best a single hit) before they're glassed flat by the retaliation strikes from all those other countries who have nukes since decades ago and don't like them very much.

Billionaires quietly dumping stocks.
And imminent has been downgraded to soon.

Billionaires quietly dumping stocks.

And imminent has been downgraded to soon.

And yet, the NYSE just recently closed over 14K for the first time in over five years....

Methinks me smells an attempt to maniupulate the market using the hands of the ignorant and gullible.

Well, that seems at least mildly plausible, but that "-90% worst case scenario" is really that, a (very unlikely) worst case scenario. The yuan gold standard however didn't seem even remotely plausible, then again, you never know.

Now, a 10% to even maybe a 25% drop, that I'd say is not only possible but quite likely.
Maybe not really imminent/soon, but it sort of has to happen eventually with how things are going.
Could be more than just a couple of years until then, probably a decade or even longer.

P.S. Don't get me wrong, a 25% drop would be quite bad for the general public, and even 10% won't be that pretty any time soon.

Or they stage things like that whenever confidence wanes to make the ignorant and gullible think there's nothing to worry about.

OK, now you've crossed over into Quetiapine / Thorazine land. This level of tinfoil-hattery exceeds even that of the Gold Standard cranks. You've entirely forfieted any right to hold an opinion on the subject.

Also what is so great about gold? It hasn't got many practical uses, at least not ones that require significant quantities of it..

Get one ton of scrap consumer electronics like smartphones & tablets and one ton of gold bearing ore and there will be more gold in the scrap phones.

150 million smartphones where sold last year each with an average of 0.034g of gold, about $1.50c worth. Same goes for just about any electronics, to a greater or lesser degree obviously.

years ago we learned how to make gold in a lab pretty easily, and i'm wondering why that never upset gold markets

Because it costs a lot more than gold already does.

I don't know how much the market will drop. However, overall view is correct. The middle class is shrinking, so the number of people with disposable income is shrinking. So there will be fewer buyers for products made by Johnson & Johnson, Procter & Gamble, Kraft Foods, Intel, etc. I can definitely see how Warren Buffett made his decision. The big banks are bankrupt, they are staying afloat thanks to various federal programs, but they are not really getting healthier, so getting rid of them is also no brainer.

It doesnt matter how much 0's they add in a computer, it will be like typing " show me the money " while trying to rebuild your base in the middle of a zerg rush.
ps- Tin foil........ where?!. Is it on sale?

Power Overwhelming....

And China will not be able to develop sufficiently before they start getting old and retiring, more of their economy going towards supporting their elderly ect. One child policy will come back to bit them in the arse long term unless they open their borders to large scale immigration from the rest of the world. "China" may well end up top dog, but I'm not sure it will be the Han.

From the article that Bane Necran linked:
"Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of GÇ£disappointing performanceGÇ¥ in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods."
^ that was from February 6, 2013

This is from today, February 15, 2013: http://www.marketwatch.com/story/kraft-profit-falls-72-on-sharp-revenue-decline-2013-02-15