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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (4075)4/10/2004 7:41:25 PM
From: TH  Read Replies (2) of 116555
 
mish,

I agree with you that most of this information was rubbish. A comment on China and gold.

About three weeks ago I returned from a week-long conference in Europe. My counterparts from China, Hong Kong, Japan, and Taiwan all attended and I had many hours to listen to their views. I asked about China and gold in general and in regards to backing the currency with gold. What I was told was very interesting. First, the reason that China "encourages" the citizens to hold gold is to create psychological support for the currency. Many of the Chinese believe in the strong value of gold over currency. Allowing the ownership of gold, and possible future backing the currency, creates a strong foundation for the paper. And, the reason the Chinese believe in gold is that during bad times, a "ring" of gold could protect a family and provide food or whatever. These were not rings that you wear on your finger, but rather a standard weight that was shaped as a ring.

BTW, the guys from Hong Kong and Taiwan amazed me. They were very aware of the American debt load and of Asian support for the dollar. They did not think it would end well, but not as a result of a hidden economic war, but rather as a simple function of economic overextension.

TH
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