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Politics : Welcome to Slider's Dugout

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To: nohalo who wrote (4618)	2/28/2007 10:00:01 PM
From: Jamey	Read Replies (2) of 50418

China Profit Stategy Newsletter ======================== How This Relates To Gold ======================== "The speculators will be back, make no mistake. And, for sure, investors will again reap profits from riding in their wake. But as prudent investors, we must never forget the power of Beijing to do whatever it takes to maintain control of China's currency. And--you guessed it--that is where gold comes in. A trillion in foreign currency reserves: That's a lot of dollars. Especially when the value of a buck is declining almost every day. Beijing has been clear: They must diversify their resources. Not only to protect itself from a faltering greenback, but also from those pesky currency speculators. And gold is one place where Beijing is crucially underexposed. According to the IMF, China holds just 1.4% of its total foreign exchange reserves in gold. The average is 5% worldwide. Beijing's decision to rebalance its reserves would create a stunning gold bubble. To achieve a protective 5% gold reserves position, China would have to buy almost a year's global gold production! So even a few percentage-points shift to gold could instantly create a supply crisis, forcing gold up to historic highs, close to $831!" China is way overdue on buying more gold reserves. Jim

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