Today
a legend who was recently asked by the Chinese government to give a
speech to government officials in China told King World News that the
gold market is going to see a massive surge above $2,000 an ounce. John
Ing, who has been in the business for 43 years, also spoke about the
incredible events happening around the world that will send the gold
market skyrocketing.
Ing: “I just put out a report titled ‘Winter Is
Coming.’ This report focuses on the opportunity for investors as well
the global problems that remain unresolved. For investors, the high
quality mining shares have 10-times upside potential from current
levels....
“The sentiment in the
mining shares is extremely negative, and the long-term relative
strength in this group is almost at zero. This is an incredibly rare
set up.
In
the midst of all this negative sentiment, China continues to buy gold.
The Russians also continue to be big buyers of gold. The Russians are
now the 5th largest holder of gold in the world, ahead of even China --
who’s last reported figures date back to 2009. So central banks are
still buying gold and it’s just a matter of time before we get a
substantial move higher in the price.”
Below is a small portion of John Ing’s fantastic piece Winter Is Coming:
“Central bankers are
supposed to be stewards of our currency which is why pronouncements are
watched for hints over the course of the economy or when interest rates
will change. What is clear, however is that central banks are all about
creating money using financial engineering. After five years the world
is awash with some $70 trillion, led by the Federal Reserve’s balance
sheet that has ballooned to a record $5 trillion which represents a
liability for the state. Money is a commodity whose creator is the
state. Central bankers also control the money supply, which has grown in
importance as the size of government deficits increase. This money has
to go somewhere. A major beneficiary of course has been the Wall Street
banks who benefited from near zero interest rates allowing them to take
advantage of the “free money”, for arbing, leveraging and placing big
bets on the casino-like markets, fueling bond and stock market bubbles.
But now with the termination of quantitative easing, markets are worried
as to what is next. Volatility is back and bubbles always burst.
Central bankers are caught
in a “liquidity trap” of their own making. After printing more of the
world’s reserve currency to pay for three rounds of bond buying over 37
consecutive months, this printed money no longer has any effect, sort of
like “pushing on string”. Part of the reason is that the central
bankers’ surrogates, Wall Street and “City” bankers are sitting on
trillions of reserves due to new capital rules (“living will cash
reserves”). The ECB, Bank of Japan and Peoples’ Bank of China are key
participants in a currency re-alignment, the consequence of helicopter
money and serial quantitative easing programs.
The World Order Has Changed
Europe and America seem to
be unsuccessfully protecting the old world economic system or order.
The European Union is threatened from internal divisions and the fact
they are not tied together financially. The Middle East is divided along
secular lines. The United States seems to leading from behind destined
to two more years of legislative dysfunction. And within this power
vacuum, the East has emerged from a regional power to a powerhouse with
China’s emergence changing economic fortunes and shifting economic
realities. The various orders are plotting divergent courses.
“Every battle is won
before it is ever fought”. Sun Tzu’s Art of War written in the sixth
century is an excellent primer on eastern strategy with application to
wars, business and economics. Sun Tzu says, “know that to fight and
conquer in all your battles is not supreme excellence”. It is better to
conquer without fighting or destroying your enemy. To win, it is best to
take over your enemy (or institution) than to destroy them.
China is flexing its
economic muscle by becoming a net exporter of capital allowing them to
become more assertive as an economic superpower, laying the foundations
for a Sino-centric financial system.
Gold’s Role in The Sino-Financial System
Meantime, America’s debt
load is its Achilles heel. China is poised to take advantage of this.
The foundations for a Sino-centric financial system have been laid with
gold a major part of it. We believe resource dependant China has taken a
page from Sun Tzu’s book, using its diplomatic and economic muscle to
regain superpower status. China once reigned the world during the early
fifteenth century when the Ming Dynasty sailed ships around the world, a
whole century before Europeans found America. China consumes most of
the world’s resources and sits on the largest cash reserves. Yet, the
dollar and lack of global institutions limits its influence. That is
changing.
China is the largest
consumer of gold and producer of gold, buying most of the world’s gold.
We believe building up its gold reserves would be a major step since the
move would hedge China’s massive $4 trillion dollar stockpile and
importantly solidify the renminbi’s role as one of the world’s reserve
currencies. In one week alone, withdrawals from the Shanghai Gold
Exchange spiked a whopping 68.4 tonnes. The Shanghai Gold Exchange is
one of China’s source for physical bullion. China owns $1.3 trillion of
US public debt. To date, China has been patient allowing America to
spend more than it produces but how much longer will allow it to debase
its currency and debts.
For China, gold is a hedge
against a depreciating dollar and negative real interest rates. China
knows that paper currencies can be debased and centuries ago, gold
retained its value over paper currencies. Asia is awash with dollars.
China has more dollars than they want. In addition, with central banks
loaded with American sovereign debt, the notion that America can grow
its way out of debt has lost credibility particular when the very same
arguments in Europe ended in failure. Greece just paid nine percent for
debt. Paul Krugman aside, history shows that the reliance on debt to
boost consumption doesn’t work. America is just another example of the
age old phenomenon in which debt increases due to a credit binge and its
spending and quantitative easing has left debt piled on more debt. This
is unsustainable. Still markets post daily highs and we are told that
all is well. The inflection point, we believe has arrived when creditors
worried about the greenback will rush for the exits. It is not so
different this time.
The World Gold Council
with the China Gold Association recently co-sponsored the first ever
China Gold Congress in Beijing. At the conference it was reported that
Chinese demand has been growing at almost 2,200 tonnes of gold in 2013,
more than previously disclosed. China National Gold, the largest gold
producer in China was co-sponsor of the Gold Conference and its
president, Mr. Song Xin, endorsed full convertibility of the renminbi
with gold as a major step to establishing the renminbi as a reserve
currency. Mr. Song also said that accumulation of gold was in the
national interest. Backing its currency with gold would accelerate that
move.
China’s gold reserves were
last reported in 2008 at 1,054 tonnes. This accounts for less than 2
percent of China’s massive $4 trillion of foreign exchange reserves. But
where to store its gold? China has been building vault space to replace
Western vaults in Switzerland, London and Fort Knox. Rather than depend
on the West, China has opened up vaults in Shanghai, with storage
capacity of 2,000 metric tons of gold. Recently, China announced plans
to open a vault across from Hong Kong in Shenzhen with a storage
capacity of 1,900 metric tons. Unlike Germany who must wait seven years
to repatriate its gold from the vaults in Britain and the United States,
China has been building its own vault space.
沒有留言:
張貼留言