Hoarding Gold for the American Meltdown By Jeff D. Opdyke, Editor of Profit Seeker Dear Sovereign Investor, Live from Shanghai, China
Go ahead say it:
"I should not heed the yammerings of those who talk trash about gold."
Good, good. Now … say that three more times. When you're done, sit down and write it out 50 times on college-ruled loose leaf.
I deem it necessary to foist this muscle-memory exercise upon you because some pundits, some of our advertising affiliates even, have been beating the drum about the fact that April 24 came and went without China making a major announcement in gold.
But because some dude questions the passing of a particular date doesn't mean the opportunity to own gold is diminished. Indeed, buying gold now assures you that when China does make its major gold announcement, you'll be in position to prosper. Did You Miss This?
Last night, Jeff Opdyke hosted a live event. He revealed the strategy behind his Sigma method and told viewers about stocks poised for as much as triple-digit returns. But he also made a special offer to attendees. Click here to learn more before it disappears at midnight tonight. For background, it was five years ago on April 24 that the People's Bank of China (PBOC) stunned spectators by announcing it had 1,054 tons of gold. Five years before that (not to the day, mind you), the PBOC made a similar announcement.
From my research — examining gold import data from government agencies in Hong Kong and the reported data from China's gold miners — China today has somewhere north of 5,000 tons, possibly close to 6,000 tons. I sent out alerts to readers and non-readers alike in recent months, explaining all of this, hoping to open American eyes to the risk that exist to our financial system.
When China announces its holdings, the world will take notice for a couple reasons: - The tons in storage will raise some troubling questions about where all the gold came from. Some will come from internal production — and China is the world's leading producer of gold. But a lot of it will have come from imports, yet the world doesn't produce enough gold to account for China's internal demand global demand.
- And the huge sum of gold inside the PBOC will raise the big question: Why? If gold is such a tarnished commodity, as lots of pundits contend these days, why are the Chinese accumulating so much of it?
To question No. 1, my answer is that the Federal Reserve has been selling U.S. gold reserves … though without an audit, we will never know the answer to that puzzler. And, honestly, even if we never figure out the lies and manipulations inside the Fed, what China is doing will still highlight a pending shock to the system, because of …
The answer to question No. 2: The Chinese are very smart people. And they have millennia of planning in their exceedingly long history; we have a couple hundred years — the last 30 of which have proven us to be financial incompetents. As I've said before, America is like a blue-collar worker saving his paycheck for Friday night. China is like a wealthy executive planning for three generations.
The Chinese know all too well that the U.S. financial system is a bonfire waiting on a spark. Yes, the PBOC owns some $3 trillion worth of U.S. Treasury paper, which leads certain conventional-thinking American pundits to believe in the concept of Mutually Assured Destruction — the idea that China will never do anything to undermine America because doing so would undermine China's financial self-interest.
Maybe … though that is a simpleton's analysis.
Because, there's another way to skin that cat … and then dress it up in gold. It's Not the When … It's the What! From the 32nd floor of the Hyatt on the Bund, I look out on a foggy Shanghai morning, across the Huangpu — the Yellow River that bisects the city — and it's impossible not to see the future. This is the axis around which the world is increasingly spinning. Like it or not.
Mutually Assured Destruction, while a convenient analogy in an America desperate to maintain her image, is not so important in China. And that's for several reasons, including the world's increasing pivot toward China (a topic for another day) and the fact that … China's hoarding gold.
Not only is it importing gold through Hong Kong — nearly 1,200 tons in 2013 alone, a record — it has now established Beijing as a new import hub for gold purchases made abroad. It did so to keep a nosey world from knowing how much gold really is flowing into the Middle Kingdom, because China does not report that data monthly, as Hong Kong does. In fact, I bet we soon see China's gold purchases in Hong Kong dwindle, which will prompt the unknowing to tell you that China's demand for gold is waning … even as the country secretly ramps up unreported gold imports through Beijing that will likely dwarf the buying that has been happening in Hong Kong.
China wants all this gold for one reason: To build the ultimate buffer against the collapse of the U.S. dollar.
When the dollar tanks — and it most assuredly will — gold prices will rise dramatically. The tons of gold China holds in reserve will soar in value, offsetting the losses on all that Treasury paper. China, then, is creating the perfect hedge to protect against the future it knows is coming.
So, was I wrong about April 24?
Absolutely.
But, then again, this was never about the "when." It's about the "what."
No one can know with any degree of accuracy when China will officially announce its gold reserves. I went out on a limb and said China could do that by April 24, 2014, since the country has a fetish for doing things in increments of five, and that date was five years after the previous announcement. But the reality is China could shock the world at any moment with its gold holdings. Focusing on a wrong date, though, is like faulting Shakespeare for misplacing a comma — you're blind to the far-greater message: that China is cornering the market in gold because of a dramatic revision to the global monetary order that we all know as normal.
Use this period of quiet to buy gold bullion, pre-1933 collectible gold coins, even gold stocks. Because when the announcement comes — whatever day that happens to be — you will be very glad you own gold. Exceedingly glad. Déjà vu All Over Again There was a time about a decade ago that we were among the first to warn readers of a time bomb quietly ticking beneath the surface of the American financial landscape. Pundits mocked us then, too. They said we were wrong, that the destruction we foresaw would not happen.
But we were accurate, unfortunately for America, about a little dust-up you might recall as the derivatives crisis that shocked Wall Street, the banking industry and the global economy late last decade.
So, go ahead and repeat after me:
"I should not heed the yammerings of who talk trash about gold." Until next time, stay Sovereign …
Jeff D. Opdyke
Editor, Profit Seeker P.S. America stands on a precipice and we're only waiting on China to announce its gold stockpile to finally push us over that edge. Protecting yourself means diversifying your assets out of the dollar. There are ample opportunities overseas to not only protect your wealth but to grow it as well. To learn more, click here. Editor's Note: Jeff is currently in China and he will have more stories to tell when he gets back. In the meantime, you can look at some of the visual stories he's created using an amazing app called Steller. Jeff's most recent story is Blood Money about some of history's most violent dictators and The Art of Money, detailing the beauty found in foreign currencies. | |
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