China has a secret gold plan. They plan to use gold to become the super power of the world and this is going to have major implications for you- no matter which country you live in. If you’re paying attention, it could mean huge profits. If you’re not paying attention, it could be catastrophic. I’m going to show you what’s developing right now and what strategies to use in your portfolio to take advantage of the potential changes in the global market.
China wants to take over the world. Shocker. They want to regain their presence as a global superpower. China was a superpower hundreds of years ago. Ever since they lost that position, they have been trying to regain their footing. I mean, which country wouldn’t want to be the superpower? We know it’s not a secret that they’re trying to become a superpower, but let’s talk about how they’re doing it and what that means for us.
CHINA ACCUMULATING GOLD
I have been investing in the in the precious metals, markets for about a dozen years. And, one of the things that is evident if you study the precious metals market, is that over the last decade, China is a massive accumulator of gold. China has just been stacking more and more and more gold. Of course, we also know all the central banks are accumulating gold right now. Last year, the US Central Banks accumulated more gold than any time in history since 1971 since we went off the gold standard. China, however, has been doing this very aggressively for the last decade.
For reporting purposes: We know that China doesn’t exactly report everything. Analysts don’t really know how much gold they actually do have. Estimates are that they’ve been adding roughly a hundred tons of gold per year. In addition to that which they are buying globally, China has a lot of gold that is mined in the country. As a matter of fact, they’re the largest producer of gold since 2007. China will allow anybody come in to mine in China. However, no gold is allowed to leave China. Their attitude is go ahead and come mine it, but you have to sell it all to us.
So, not only has China been the largest producers of gold since 2007, they’ve also been the largest importer of gold, as well. Some analysts think that they could have over 5,000 tons of gold on the conservative end and 10,000 tons of gold as the liberal estimate. To put this into perspective, the United States is supposedly the number one holder of gold. The US supposedly has about 8,000 tons. I say supposedly because the gold holdings haven’t been audited. Likely, based upon the way the gold markets had been manipulated, I think the United States has probably dumped a lot of the gold. Either way, the United States is reporting and they have roughly 8,000 tons but some analysts believe that China could have as much as 10,000 tons.
WHY DOES CHINA WANT GOLD
Why is China buying all this gold in the first place? Well, it’s the same reason that all central banks are buying gold in higher quantities than they have in 50 years. China and the central banks are accumulating gold to protect themselves from a failing currency- a failing fake currency. Imagine if you could just produce a fake currency or, basically, paper out of nowhere. After you create that money, you could take that fake Fiat money and then convert into gold, which is real wealth. That’s essentially what the central banks and China are doing. They’re printing fake money and then they’re buying gold with it.
China has something even bigger in mind. While most central banks are buying gold to protect against their felon currency, China has also been buying gold to protect themselves against their currency. Furthermore, as one of the largest holders of US debt, they also want to protect themselves against the U S debt.
Perhaps most importantly, China is trying to get themselves a larger share of the SDRs. Now, what are SDRs? SDRs are Special Drawing Rights from the International Monetary Fund (IMF). The IMF, very simply, creates this basket of currencies. These are reserved currencies and the currencies are what detail the strength of each country’s money on a global level. The U S dollar takes up the dominant position inside that IMF reserve currency basket or the largest percentage inside that SDR. What China has been wanting is to get a larger percentage of their currency in that SDR basket. The larger percentage China has inside of the SDR, the more of their currency will be purchased. This brings more money into their economy.
This is not a new strategy for China. They’ve been doing this gold positioning for a while. As a matter of fact, back in 2015- 2016 they were really petitioning it hard. During this time period, China continued to grab up a larger and larger share of the SDR. The currency purchasing as a result of their position in the SDR pushed somewhere between $2-3 trillion in to the Chinese economy. You can see where that is one of their biggest motivations.
MANIPULATING THE GLOBAL ECONOMY USING GOLD
It’s been rumored for quite some time that China was accumulating all this gold to at some point announced that they’re going to try to do a gold back currency again. At that point, they could really take a large share of that SDR basket- if not take it over completely. Another perk for China of a gold backed currency is it’s impact on the dollar. The best way to undermine the dollar is to build a currency that is even stronger. China wants to become the reserve currency. Upending the United States currency is the only way for China to become the reserve currency.
Another way China is manipulating the world economy is how they’re working around the dollar. Most global trade, like oil, for example, is supposed to be done in U S dollars. Because the US dollar is the standard for trade, the US uses the US dollars as weapons. The US continually slaps sanctions on country sanctions. They add sanctions on sanctions on sanctions.
The way China’s been manipulating the economy is they’ve been trading with the US enemies. While the United States has sanctions against Russia and Iran, China’s attitude is that they will trade with them. China will buy oil from Iran and Russia. Furthermore, they’ll do it outside of the U S dollars. In sum, China has been secretly trying to build their currency by buying gold and trading with US enemies to gain strength and really establish their position as SDRs. These power moves are continually undermining the US dollar.
DIGITAL CURRENCY WAY FORWARD
At the same time as these other things are happening, China has really pushed the rise of digital currencies. I’m not even talking about cryptocurrencies. China is pushing digital currencies. In China, they have billions of people using basically digital money. They use platforms made by 10 cents like WeChat, Ali pay, etc. They don’t use paper money, debit cards, or even credit cards. The citizens of China pay directly out of the app. China is already on this digital platform and moving to a digital currency isn’t as daunting of a leap for them.
About a month ago, the president of China, President Xi Jinping, announced that China was going all in on digital currencies and blockchain technology. In my opinion, I think they got motivated by what Mark Zuckerberg was doing from Facebook with Libra. China calls it blockchain technology, and they want to be the first country to launch a blockchain digital currency. Spokespersons say they’ve been working on this initiative for over 5 years. Recently, Mark Zuckerberg went before Congress and he warned the US regulators that China’s doing this and they’re winning this race. If it’s not the US to be first to adopt the initiative, then it’s going to be China. But here’s where all this starts coming together…
CHINA’S ULTIMATE GOAL
Ultimately what China’s doing is they’re not trying to create a new currency. China is not trying to create a Bitcoin. Furthermore, they’re not trying to create a Libra. What they’re trying to do is digitize their existing currency. In other words, they want to take their currency that they already have and put that onto the blockchain. And, according to Max Kaiser, China is going to announce at the same time that their currency is now on blockchain and that their currency is going to be backed by gold. The shocker will be that China doesn’t have 2,000 tons of gold, like people are speculating. This blockchain announcement it will have China front and center. While they have all eyes on them, announcing they have 10,000 or 20,000 tons of gold would be a bomb drop to the whole world.
If China has 20,000 tons of gold, it would certainly alert to the rest of the world that they’re serious about regaining their global positioning. Gold backed cryptocurrency is one dangerously aggressive move to unseat the U S dollar. Not only would gold back cryptocurrency establish China’s global dominance, but it would send shockwaves throughout the world.
So what would happen to the US dollar and the price of gold if this occurs? What we would see instantly from China announcing that they had even 10,000 ounces of gold, much less 28,000 tons of gold, is that we would see the price of gold skyrocket. The price of gold would go up almost linearly. Additionally, Chinese currency, the wan, would also skyrocket in value. The obvious downside, for us, is we would see the value of the U S dollar plummet. As you can see, these actions by the Chinese have some repercussions and so we have to be prepared.
IMPACT ON YOUR PORTFOLIO
If we had a crystal ball, that would make investing way easier. We can’t trade and we can’t invest in hindsight. So, we have to take the information that we have available to us and make the best decisions that we can at any point in time. We need to be paying attention to indicators so we can move and react as things come up. What we do know with respect to China and their global positioning is that for the last decade, China has been accumulating gold. We know that they have been doing that in hopes to potentially relaunch their currency as a gold back currency.
Over the last decade, analyst thought China was simply trying to get a larger share of the SDR in order to get more money flowing into their economy. However, in the last month, as they’ve announced they’re going to release their own cryptocurrency, their own blockchain currency, speculation about the cryptocurrency being gold backed is swirling. Again, if China announces that that is going to be gold back and they say it’s not 2,000 or 5,000 tons, it’s 20,000 tons it could be drastically change the global climate. Obviously, this is all speculation, but all these things we’ve been watching for a decade are lining up with China’s recent announcement.
We know big things are happening, so you need to be prepared. How do you prepare? Simply. Stack some gold. Make sure you have gold allocation in your portfolio. Buy some Bitcoin. That’s a protection against the U S dollar fund- in the event the US dollar value plummets. Keep in mind my usual guidance on asset allocation and position sizing, but these assets need to be in your plan right now to insulate you against the global upheaval rumblings.
To your success.