stockpiling industrial metals such as copper, nickel, aluminum and etc in lieu of gold as a move to ease away from dependency on the US Dollar.
I don't think they're ready to do that yet because they hold so much trade debt with us if our economy were to falter theirs would face a serious regression they are so heavily invested, however after 5 or 6 years of stockpiling industrial metals and such they would be ready to drop that sword of damocles.
china yuan gonna replaces u.s. dollar as the major currency in the world soon. remember we replaced mexican peso before during 1800's.
I agree. We have each other in a lock. They dump us, we stop buying their stuff. We dump them, they call in their money. If it does happen, I hope we dump them first.
That's a guess, but by no means the only reason they might be stockpiling strategic industrial metals. The US used to do the same thing back in the days when we actually made things. China is also spending non-dollar reserves, and reducing dollar reserves might only be the second or third reason for the purchases. Unless and until China makes a public statement, nobody knows why they do the things they do.
Even China doesn't want this. They favor a commodities-backed global reserve currency to replace the dollar.
Keep in mind that rise in demand of base metals is utilized as a leading economic indicator but this suggests that maybe the current rise is artificial. The current slide of gold and silver prices - many experts are trumpeting charges of price/market manipulation. Plus China is not playing the precious metal hedge game - which certainly eases demand. Banking sector is post earnings well above projections - read the thread titled "Three Card Monty". Is the economy improving or are its looks deceiving?
The prevailing wisdom seems to be that the rate of the downturn is not as steep which means we're still turning down, just not with the spectacular fury that began with Lehman's fall. From what little I can see from my vantage point, that holds true. Heading 20mph into the abyss is surely better than heading 100mph into the abyss, no? An improvement, for sure, but still pretty bleak.
China has also become one of the top 5 producers of gold, I'm sure they will mine heavily as long as the price is high but gold mining will slow if the value falls, just as we do here or in Canada. I'm sure it way too profitable to hoard at this time but if the price falls, who knows what will happen.
Here's a link to a story from this morning http://www.marketwatch.com/news/story/gold-rises-china-reserves-copper/story.aspx?guid={5AACC0F9-77C9-413D-963B-0241BA6ED0E3}&dist=news According to the story, China is the worlds largest producer of gold. They don't allow gold ingots to leave China. Think about it. Suppose you're China. You have 2 trillion dollars of our money. They know our dollars have no value, so they're buying stuff that does have value. Same thing I'm doing. Some people think China wants our economy to do well, because they sell stuff to us. It doesn't do them any good to sell us stuff if the dollars we give them are worthless. They could just make stuff and dump it in the ocean. The more we print money, the less China's 2 trillion is worth. Gold will be over $1000 by June 1, 2009.
I would definitely question your "in lieu of gold". The other parts of your statement are correct. Today's price rise in gold was attributed to reports that China is and will be buying more gold. See story in Bloomberg today "China Increases Gold Reserves 76% to Fifth-Largest" http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azu2GgdtzJqQ It appears that China will continue to purchase gold for some time.
I mostly agree...but I don't think they will "drop the sword of Damocles". Because the dollar is the world's reserve currency, doing that would certainly harm the U.S., but it would also harm of lot of other countries that China would prefer to maintain good relations with..
China overtook South Africa as the world's largest producer of gold in 2007. China has the fifth largest stockpile of gold by country: 1. U.S.A 8,134 tons (our #1 ranking helped by cointalk member's gold holdings!) 2. Germany 3,413 tons (on a per capita basis these guys are #1) 3. France 2,487 tons (who would have thunk France was #3) 4. Italy 2,452 tons (mostly in churches?) IMF 3,217 tons (the International Monetary Fund is not a country, but they're definitely a player in the gold world) 5. China 1,054 tons (they have some ground to make up on the U.S.A)
China has been hoarding about 25% of their annual domestic production of gold which is sort of a back-door method of building reserves which minimizes market impact. I wonder if their annoucement on Friday is an indication of plans to buy through international market channels.
Which means, per capita, they are 95% less than the USA. That seems to be true of a lot of things. China's gross domestic GDP is less than one third that of the US; per capita, it is 87% less than the US. It's easy to have a large "per cent improvement" when one is way behind to begin with.
