China's Demand For Gold Has Trapped The West's Central Banks

ITs not just gold...


Its silver too, Silver is affordable, and holds its value.

Most people can't afford to just go buy hard assets in oz of gold.

BUT Silver? anyone can do it, that is the route I would recommend for the cost conscious who don't have a spare couple grand to get a few oz of gold.

Right now it wil hurt China and Russia if the US economy tanked due to any bad news about any revelations of the amount of gold stored in the US.

reply to post by orionthehunter


China and Russia are increasing their gold holdings while the US's gold reserves are shrinking...fast. EU nations have their gold stored in the US....not Russia and China. I'm sorry, but you just don't get it. In a scenario where the US dollar tanks, Russia and China will certainly feel the effect...however they are producers....which means they will recover rather quickly. The US on the other hand are consumers...and produce very little.

We are also a major food exporter.

In point of fact...the US is not.

Vegetables[edit]

Vegetable Largest Producer Second Largest Producer
Dry Bean India Brazil
Onion and Garlic China India
Cabbage China India
Green Bean China Indonesia
Chick peas India Pakistan
Pulses India Mozambique
Cauliflowers and Broccoli China India
Brinjal China India
Potato China India
Tomato China United States
Spinach China United States
Cassava Nigeria Thailand
Soybean United States Brazil
Carrot China Russia
Cucumber China Iran

Source

Feel free to look at the other catagories of food exports...fruit, cereals..ect. The US leads very, very few of these catagories. I'll draw your attention to who the largest exporters of food are in the world....CHINA.

Going into greater debt is not a solution by itself.

It's not a solution at all unless you can assure a return rate higher than the cost of incurring that debt. This is simply not the case in the US.

I did hear recently the US budget deficit is rapidly shrinking so this is good news.

Far too little...far too late. Besides...it's the very system itself that is flawed. Here fiat currency rears it's ugly head yet again.

Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing federal debt to soar. Federal debt held by the public is now about 73 percent of the economy’s annual output, or gross domestic product (GDP). That percentage is higher than at any point in U.S. history except a brief period around World War II, and it is twice the percentage at the end of 2007. If current laws generally remained in place, federal debt held by the public would decline slightly relative to GDP over the next several years, CBO projects. After that, however, growing deficits would ultimately push debt back above its current high level.

Source



The National Debt Cannot Be Paid Off

In fact, the debt must increase, because the interest is constantly accruing. Interest is added to the debt, as it can’t be paid off either. Total debt must grow by at least the interest. Debt actually increases faster than that, because the government craves what now passes for growth.

The rate of debt increase is proportional to the debt itself. It is not a fixed dollar amount, such as $100 billion a year. It is instead a percent of total debt. Mathematics has a term for this type of growth: an exponential function.

Exponential growth is not sustainable, according to credible scientists. Mainstream economists ignore this fact in the hope that that somehow growth can outpace debt, one year a time.

But exponentially rising debt is not sustainable because the capacity to service the debt is finite. Without a means of extinguishing debt, servicing is merely borrowing new money to pay off old debts. This is the equivalent of taking out a home equity loan to get money to pay the mortgage.

Source

what the US is doing with energy is a game changer.

Unfortunately...it is not a game changer, as you put it.

orionthehunter
Losing reserve currency status will cause gas and food prices to be much higher. Gas was only $1.40 or so just 5 years ago. Our currency has gone downhill.

edit on 11/4/14 by orionthehunter because: (no reason given)

Where do you live that gas was less than $3, no less than $2 a gallon in 2009? I remember paying $3+ a gallon for gas in 2009. I don't remember gas being that low since like 2002.

reply to post by hopenotfeariswhatweneed


priority is to sustain.

good for you you're organised and autonomous.

however the op has a point and the point is to know that after the collapse whatever you have in the bank is lost and that instead of keeping savings one should spend them in tangible goods.

That those goods should be gold or silver, no, definitely not.
But then once you're organised (for example for me sail boat, fishing gears, solar panel, ton of rice etc) and if you have some cash left then get gold, silver, bronze or palladium.

Now consider all the city boys & girls who don't know how to live without a supermarket down the road : they're more or less left with the metal option.

That those goods should be gold or silver, no, definitely not.

reply to post by anHairInTheSoup


I could not disagree more with this statement. In the scenario where the US dollar does go to zero value....what do you think will happen to the price of gold? Or silver??

I suggest you watch the following...

Jim Sinclair: Gold Will be $50,000 per Ounce

Renowned gold expert Jim Sinclair says financial calamity is just around the corner for America. Sinclair contends, “We are facing the annihilation of currency. We are facing the shift of America as the leading and most influential nation of the world to some form of banana republic. . . . If it wasn’t for food stamps, we would be facing long lines of people waiting for free food.” For gold, everything hinges on the U.S. dollar, and Sinclair says, “I think the dollar gets hammered. I believe we are headed for hyperinflation.” One of the many black swans, according to Sinclair, is the possible abandonment of the U.S. dollar by Saudi Arabia. If Saudi Arabia stopped selling oil only in U.S. dollars, what would that do to the buying power of the buck? Sinclair says gasoline would be “$10 a gallon very soon, without a doubt.”

Source

At this point it is important to note that China is now the largest purchaser of Saudi oil....if push came to shove the Saudi's will go where their own interests lie.

China exceeds US to become Saudi Arabia's top oil customer

HERE


As for silver....

According to Duane, most people are just as unprepared for a dollar calamity as they were for the recent super storm in the Northeast. A much bigger financial storm is coming. “The big problem with all this is counter-party risk. You cannot trust anybody; you can’t even trust the currency.” Duane trusts physical silver, and he thinks its 53 to 1 silver to gold ratio per ounce makes silver attractive. Duane thinks he could make a good case for “. . . a one-to-one silver to gold ratio, especially with all the paper manipulation.” Duane says, “The system will collapse, it must collapse, and people will learn a very difficult lesson.” In the next move up, Duane see’s silver “pushing past $50 per ounce.”

Source

It is my thought that the price of silver could go much higher than this very conservative $50 per ounce....much higher. Every piece of commercial electronics on the planet utilizes silver in it's manufacture....everything has silver in it.

The number one use of silver in industry is in electronics. Silver's unsurpassed thermal and electrical conductivity among metals means it cannot easily be replaced by less expensive materials.

For example, small quantities of silver are used as contacts in electrical switches: join the contacts, and the switch is on; separate them and the switch is off. Whether turning on a bedroom light using a conventional switch or turning on a microwave using a membrane switch, the result is the same: the current can pass through only when the contacts are joined. Automobiles are full of contacts that control electronic features, and so are consumer appliances. Industrial strength switches use silver, too.

Source

I suggest that you rethink your assesment of the value of gold and silver.

reply to post by deadcalm


you completely misunderstood my post !

(maybe you want to reread until you understand or ask question before jumping to conclusion if i was not clear enough for you)

between the full equipped for autonomy sailboat and its value in gold before the collapse i chose the boat, because after a collapse i'd have to spend much more gold to get it (if only i still can).

But if i still have some cash after the boat and the best equipment available, then i'll get gold (or silver or palladium - yes palladium has been proposed by some economists to back the next reserve currency, so it's a great bet in fact).

you seriously think my boat would cost less in gold after a collapse ? you seriously think any durable tangible goods (that has the huge probability of not being produced anymore after a collapse) will cost less in gold after that collapse ?

during collapse the value of the cash will drop drastically against the goods (hyper inflation - cf germany in the 20's),

but the value of gold against goods (that may not be produced anymore) will also drop although it will obviously drop a lot less yes (and so the relative value of gold against the cash will increase a lot which is your point that i didn't challenge whatsoever)

if you think to buy gold so that after the collapse you can buy the goods you'll want/need to reorganize your life cheaper than you would before, you're so totally mistaken.

reply to post by Krazysh0t

I suppose for many it may have been longer than 5 years ago. Apparently somewhere around 6 to 8 years ago.
I remember Bush was in office and gas was less than $2 a gallon.

Five years ago in South Carolina, gas prices were less than $2 a gallon.
www.southcarolinagasprices.com...



You'll need to click on the 5 year tab to see it.

reply to post by deadcalm


As of 2013, the US was the third largest manufacturer in the world. I do not exactly call that as producing nothing.

www.manufacturingdigital.com...

It's true that China has the top spot but that doesn't mean the US doesn't produce very much.

In 2008 the US went into a financial crisis. The entire rest of the world was affected a great deal. I do not blame China and Russia for wanting to get a separate reserve currency. I do get it. Our politicians do not. I was trying to point out the price of gas in dollars has risen over the past several years from less than $2 a gallon to about $4 or so. I wasn't particularly careful to state how long ago it was.

I just do not believe our currency is about to collapse just yet. We might still have a few years before it starts really going down the tubes. If our economy grows fast enough, I do believe economic growth can solve problems. Of course on this site, this is likely a very contrarian opinion. The US does have enormous liabilities but it does not mean our government will necessarily pay all that. In fact I see our government paying out less and less benefits. The American public will not be happy when they discover either their benefits get cut way back or even worse, our currency finally collapses. The longer politicians put off making decisions, the worse it will get.

I have hope future elected politicians and the general public realize this but maybe that is a lost cause. A currency collapse and a new currency might be in the cards already. A faster economic expansion would have helped with a lot of problems.
With the help of the Fed, our currency has gone down in value about 96% from the early 1900's until now. In other words a current dollar bill is worth less than a nickel was back around 1914.

The problem with most of our debt as of 2010 is that most of it is indexed for inflation and going to the entitlement programs. Here are some possible solutions.
poetvix.hubpages.com...

I did a little checking and did learn something. The solution appears to be for the US to cut the growth rate of spending to keep it flat.
mercatus.org...

Keeping the growth rate of spending down to 2% or less might do the trick over 10 years if I remember correctly. I believe I read this would balance the budget. Information is from the article linked above.

If the US currency was gold backed, then losing the US gold reserves would be devastating to the US economy. I do consider what happens in the Bond market as more critical than the Gold market for US currency health, there are many other commodities involved in the framework of the US currency. Personally I just see the bond market mainly as a method to help the rich stay rich and not a vital component for a strong and stable economy. How the money supply is managed through new cash supply and old cash destruction is very much vital.

reply to post by deadcalm


mate you have gold fever ...take a trip to aussiland and go and pan yourself some....you may find it addictive though

if you really think you will retain wealth after a collapse you really need to re-evaluate....i would prefer to be the dude on the boat at least he can sail away from doom...a collapse will look something like the zombie movies we have all been watching for years

reply to post by kwakakev


you forgot quantitative easing as the main mean to keep the rich richer

I don't know of too many banks that will accept a couple of chickens and a case of tomatoes as a mortgage payment.



If you lose the roof over your head, you'll either be living in your car (unless the bank owns that too) or in a pup tent on the street corner.




Important Point #1 - In a petrodollar collapse scenario, there will be some form of currency used "in lieu of" due to the necessity of continued commerce... that currency will be precious metals because there is no other viable replacement at this time.

Important Point #2 - In the case of a petrodollar collapse, almost instantaneously the price of gold will skyrocket as a result of central banks losing full control of gold pricing manipulation on the world markets.


And something else to chew on:

These people who yammer on and on about "you can't eat gold" truly have no understanding of what an economic collapse is all about... they're only thinking in terms of "The Walking Dead" and "The Road" apocalyptic type scenarios.

An economic collapse is a completely different ball of wax.... ie: Countries will continue to function, governments will continue to function, banks and creditors will continue to function, financially secure businesses will continue to function, global markets will continue to function, etc etc.

And this idea that there's not "enough physical gold" to go back to a gold standard ?

It's laughably ridiculous... The value of gold (and silver) will just simply be adjusted until supply meets demand - if that means an ounce of gold is worth $5000 or $10,000, then that's what will happen. THERE IS NO SET QUANTITY THAT'S NEEDED !

reply to post by CranialSponge


if you have debts, mortgages, you're screwed and instead of stacking up gold you should get rid of your debt !

this being said, once the $ has collapsed and is worth zero, you can multply by 50000 or 10000000000 or whatever, it'll still add up to zero in dollar value or I'm missing something in mathematics ?

then i don't know about many banks or businesses in the us that pay their employees in gold rather than dollar ? & i don't know about many employees that will accept to work for peanuts once the $ has crashed. There would be a period of total chaos until $ is replaced.

assuming the value of metal will increase against commodities in a final crash scenario is non sense.

nb: i do speculate on gold but against fiat currencies (certainly not against durable goods & commodities which is what you propose to do)

Deadcalm you stated that the US is not a major food exporter.

quote:

"In point of fact...the US is not."

end quote

You are trying to argue the US is not a major food exporter by looking at specific categories. Look at the big picture.
The US is the top nation in the world in dollar terms of agricultural products exported.

www.mapsofworld.com...


I wasn't trying to argue the US is not in danger of a currency collapse. I do believe we are especially if the public and politicians we elect do not recognize the problem. However I am stating that there is still time to do something about it without it necessarily being a done deal. It will require restricting the growth of government spending to 2 percent or less per year while keeping revenues neutral. Apparently we can not use inflation to get rid of the issue due to most of our debt liabilities being indexed to inflation with the entitlement programs. Entitlement benefits will need to be cut in my opinion. The alternative is far worse. I do not want to live through a currency collapse and the loss of all my life long savings. I do not want to see everyone else lose all their life long savings. I do not want to see mass starvation and hunger in the US because no one took action. I prefer to hope for change for the better. I believe we did not get the kind of change many people hoped for in the last few elections.

It is not realistic to expect 7 percent GDP growth to grow our way out of the mess. Spending restrictions are possible with reform in the government programs.
mercatus.org...

Here's another link that I will try to read later. I skimmed over it and find the information interesting.
It discusses why we can not use inflation to end our debt situation.
mercatus.org...

I did read removing some regulations may improve the situation in terms of overall economic growth.

note: There's a glitch in the system for long term members of ATS. I did not have anywhere close to 2 million stars a few weeks ago. I just consider it a nice bonus for being here so long. I'm not complaining.

I disagree with the premise of this thread, maybe I'll come back later to argue it. I do want to mention Fort Knox though.

There's a bit of evidence that when a few people were let in back in the 60's (I think it was) and some photos were taken of one of the gold rooms, the gold wasn't solid gold bars. This comes from eyewitness reports, and the picture on the scale shows the wrong weight.

There's another issue to, which comes from the employees who have worked there and talked. There is a finite number of rooms to hold gold in Fort Knox. While it's possible they may all be filled with gold, the volume doesn't match up with the volume of the amount of gold claimed to be there.

What Fort Knox really holds is in the basement... and it's almost certainly not gold. It's anyones guess as to what it really is, but you don't put an army division on top of a Fort in a relatively central position in the country to guard gold that can't physically fit in the building.

I don't even understand why the west even sells any gold to the east.

Gold price collapse is more likely to happen. What happens then?

reply to post by MajorAce


Gold is a hard asset that cannot be diminished in value by inflation, unlike fiat currencies....which are nothing but promise notes...backed by nothing. Gold is not going to collapse in price...unless like last year, there was massive market manipulation...ie...a LOT of gold was dumped onto the market at once...decreasing it's value....but as we have seen by the sharp increase in gold in the last 6-8 months....this is only temporary. Demand in eastern nations is only increasing...and will continue to do so.


Fiat currencies however, are being massively debased as I type this....through massive money "printing". The US dollar has lost more than 90% of it's purchasing power due to this debasement, or "printing". This is known as inflation.

Gold becomes a good investment only when the other currencies are failing, inflating, and debasing. This is one of those times.

Source

Considering that FED is still printing 45 BILLION per month....gold's value cannot do anything but increase.

From QE 1 through QE 3 as of now the Federal Reserve has increased its balance sheet from $900 billion to $3.7 trillion today. Here is a primer on the mechanics. The Fed currently purchases $40 billion in mortgage backed securities and $45 billion in treasuries each month. The Fed has no excess money or reserves…..so they simply fire up the printing presses and print out of thin air $85 billion of new money each and every month. This is money that goes directly into the money supply. Nobody knows the ultimate denouement of money printing on this scale. Germany tried “abnormal” money printing in the early 1920’s after W.W. I and the result was hyperinflation, collapse of the German economy, and the rise of Hitler.

Source

EVERY time a currency has been inflated like this...it has ended in disaster...this time will be no different.

but you don't put an army division on top of a Fort in a relatively central position in the country to guard gold that can't physically fit in the building.

reply to post by Aazadan


Sure you do...if you don't want anyone to know that you have no gold.

All part of the show.

Ok, so back to this thread... I want to talk about the basic premise that gold is immune to inflation. This isn't true. Since the mid 1600's we've had fractional reserve banking and currencies that are redeemable for gold or otherwise gold backed. However according to the theory you only need a percentage of gold on hand to hand out to those redeeming their gold. For most of the past the ratio kept was 10:1, this is why such things as 10% down became standard on loans. Banks would take your 10% down, leverage it (create money) and finance the rest. Holding onto that 10%. Then you would repay the rest of the loan, which is all profit to the bank.

This applies to gold too, as long as physical gold and silver coins aren't the only medium of exchange for all transactions the banks can leverage what they're holding and create money. This leads to inflation even in a gold backed system. You just have to look at a year while we were on the gold standard to see that. There was roughly 2481600000 oz of gold in the world in 1950 at $34.72 an oz that's $86,161,152,000 worth of gold. The US had about 1/3 of that at the time since so many countries sent their gold here for safe keeping so $28,433,180,160 or about 28.5 billion. Just federal spending in 1950 was 70.3 billion and the M2 money supply (the only figure which the number is available for) was $151 billion.

As you can see, gold backed currency doesn't restrict inflation at all, money can still be freely created simply by changing the leveraging rates. The only way to avoid this is if all transactions are done using the metal itself and there is no concept of a credit line.

deadcalm

but you don't put an army division on top of a Fort in a relatively central position in the country to guard gold that can't physically fit in the building.

reply to post by Aazadan

 

Sure you do...if you don't want anyone to know that you have no gold.

All part of the show.

--
Ugh, DeadCalm at it again with the doom porn.

This isn't the movies, the previous post is correct, you simply do not put an army post out for show.

America is a top exporter of food, yes we import a lot of energy, at the same time, sitting on top of a own energy reserves that we simply don't use.

I will agree with you on ONE thing, our politicians and wall street continue to bleed the system, money corrupts and if what your suggesting too is going to happen, guess who follows? CHINA AND RUSSIA.

Already these nations are showing signs of said corruption, you just don't want to admit it, you would hate to admit it because the truth is, your NOT waking up sweating worried about america, your wanting to see the decline of it, why? what was it that made you hate us? did a bank foreclose on your house? did your car get repo'd? or....did the anti-US crowd finally sway you?
You can talk business all you what, but there is no disputing that your hardly an expert, neither am I, your putting out information is a click on MSN.

And for the record, you CAN'T eat gold, Society reacts very differently then you can imagine.

one more thing for the record, IF the US falls, it will Shake the global foundations of this planet, NO, none of this, "Well china an russia will feel some of it....", NO, they WILL FEEL IT and burn along with us.
Truth is, its not going to be China or Russia that rises, but a new nation, birthed here, in the US.

If there is anything I have learned here on ATS, financial collapse is the least of my worries.
--
Btw to the poster who does'nt believe in cheap gas....
When I PCS to Ft. Hood from Hawaii on 2012, gas on post was $2.18, how about THOSE apples?
its up now of course.