The Chinese are insulating themselves against collapse of capitalism with gold

There are good reasons why China is buying gold, of which an escape from the United States Dollar is the most important. But the Chinese situation is interesting because it goes back to when the People's Bank of China, the State Bank, the state central bank was first appointed the monopoly of gold and silver dealing, and that was way back in 1983. So we're talking about something which is 38 years ago now. But what happened was that no resident in China was allowed to hold gold or silver for that matter. So, during the time between then and when they were permitted to own gold which was 2002 which was when the Shanghai Gold Exchange was founded, it's quite clear that the state accumulated a pile of gold in particular talks about gold rather than silver, and it did this for obvious reasons, others have done this in the past, like the Arabs in the 1970s. When President Nixon took the dollar off the gold standard completely effectively he and Henry Kissinger, the former United States Secretary of State told the Arabs "we can't stop you charging what you'd like for your oil" But he insisted that it's priced in dollars, and that they run their surpluses in dollars through the US banking system Another example was Germany after the Second World War, when Germany's economy began to recover and really build and got going nicely. It started buying gold in dollars into gold. Sort of substantially held in the New York Fed, the Arabs were doing the same thing, but as far as they were concerned whatever property is not money, isn't gold, gold is so much in their psyche. So they were putting 15% of what they were earning from oil revenues into gold. Kleiner (Kleiner Perkins, a venture capital firm that specializes in investing in early-stage, incubation, and growth companies.) had exactly the same view, it did not want to have just dollars because it knew that dollars could go to nothing and they'd have no control over it. So what do you do you have some insurance against.

So, between 1983 and 2002. People's Bank of China, accumulated huge quantities of gold, basically from the way the regulations, pointing them were written. We also know this because China invested an awful lot of money into gold mines, and became the largest producer in the world. In short order. We know this because the state still controls and runs completely all the refining gold refining industry in China. And furthermore, imports Dory from other countries and no gold leaves China, at all as they are being distributed across various accounts; for example people PLF People's Liberation Army has stacks of it in white in warehouses, also the Communist Party have stacks of it and all the rest of it with none of this appearing rarely in the official reserves, so the Chinese has loads of gold which they're not going to use it to back their own currency, because that would limit what they do with their own currency, but it is an insurance policy against a collapsing dollar. They are printing dollars they are printing euros, they are printing pounds they're printing yen to keep stock market, high, and to keep them bubbling and at some stage, this is going to go wrong. This is where we start talking about the effect of inflation, monetary inflation is to drive up prices, which drives down the purchasing power of these currencies, so they're already weakening. And as soon as you recognize that point, you begin to recognize that the only thing that can happen from here is that interest rates, reflecting the time preference on these fear currencies have got to go up is going to definitely pump the stock market bubble.

And I would reckon that's the way, prices are going through
the way they're increasing, the way the Fed and other central banks are seeing that saying this is transitory which is obviously not. Yhey're just whistling hoping that something won't turn up. But eventually, they will have to put up interest rates, probably at the end of the summer. And when they do that, the bubble pops. This would then be followed by an increase in the rates of quantitative easing, because all they want to do is to keep the stock market bubble going. They're gonna have to operate from 120 billion dollars to probably about 200 billion dollarsa month or even 300 billion dollars a month which is destroying the currency in order to keep the bubble going.

According to Marx said "capitalism destroys itself, and their currencies with it" Therefore When your bubble your share starts popping, then at that stage, it takes the currency down with it. And that's exactly what happened in France. But what alternative have they got? Do they just stand back and let them all fall down? They don't have a mandate to do that and that's the important point. And you know what are the Chinese doing, they're insulating themselves against collapse of capitalism with gold

With all being said, the financial importance of gold can not be undermined. A precious metal that can serve as hegde against inflation, protect against financial catastrophe, give good return over a period of time, and now serving as a means of protection of the collapse of capitalism as predicted by Karl Max.
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