05/22/09

Chinese Double Gold Reserves

by Larry Email  472 words

While the Venezuelan people are desperate to get their hands on dollars, causing the price of American currency to break the 7 BsF barrier for the first time, the Chinese government has just announced that their gold reserves have been increased up to 1.054 tons of the precious metal, a figure that represents almost double of what they possessed 6 years ago.

You might be wondering why it is important that the Chinese are purchasing gold and gradually getting rid of their almost 2 trillion dollars on international reserves. It is important because it confirms what we have been saying in this space for the last five years: the dollar is increasingly losing value as a result of the irresponsible inflationary economic policies of the United States. The Chinese government, as a major dollar holder worldwide, has a reason for being worried about the gradually eroded dollar value.

Consider this: In the middle of the credit turbulence around the world, the US American Central Bank or Federal Reserve has tripled its liabilities, creating in the course of the last few months more than a trillion dollars out of thin air. Now imagine how much time and work it has cost the Chinese to amass two trillion dollars in their reserves. It is not something that happened overnight and suddenly the Chinese government woke up with 2 trillion dollars in the bank. It is, on the contrary, a process that took years and years during which the Chinese economy has produced more than it has consumed. And now, in a few months, the US American Central Bank creates 1 trillion dollars, with the effort that takes to stand in front of the cameras and announce it.

Obligaciones totales de la Reserva Federal estadounidense en Millones de dólares
Federal REserve balance sheet in millions of dollars. In just a few weeks the central bak created more than a trillion dollars in new credit, although not all that new money has reached the streets, it very likely will a some point, with catastrophic consequences.

As it can be appreciated in the graphic above, in the strike of a pen two trillion dollars that the Chinese have stopped being so important.

Obviously no one likes to be robbed and that is precisely what we have in operation here. A white collar heist in the benefit of the bankers in Wall Street and of the governors of the first world power.

So if you are desperate to get dollars, don't be too rushed. Maybe it would do you good to pay attention at what the Chinese are doing and buy a few grams of gold, to protect yourself from the upcoming hyper inflation, during which you could see yourself in the situation illustrated below:

Niño zimbabuense con paca enorme de billetes
A Zimbabwean child carries a huge pack of devalued Zimababwean Dollars, which will probably serve to buy only a newspaper

As we say in Venezuela, war forewarned kills no soldier...

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