china is soon going to make a move

Another Reason to Like Gold
by Larry Edelson
Dear Steven,


The credit collapse is not entirely over. Nor is its impact on Main Street.

And as we saw yesterday, there will be more sell-offs, sharp ones that scare the dickens out of nearly everyone.

That's why I suggest sticking mainly with natural resource-based companies that operate businesses which deal in assets that have intrinsic value — and that will be the main recipients of the next wave of what I call the "Great Re-inflation."

At the top of that list is my all-time favorite: Gold.

You know I'm a gold bug. And given everything that's happening in the world today, I'm more of a gold bug than ever before.

How can you NOT be in gold?

There are dozens of reasons I believe everyone must own some gold. But lately, there's another one that's rising to the surface ...


China Is Soon Going to Make
Some Big Buys In the Gold Market

Just yesterday, China's central bank announced that its foreign-exchange reserves rose to a record $1.905 trillion.

If China were to lay this nearly $2 trillion in surplus reserves end-to-end using dollar bills, the trail would stretch for 193,813,130 miles. That's enough to wrap around the widest part of the earth 7,752 times!

Clearly, Beijing's piggy bank is overflowing with money. In fact, at nearly $2 trillion, China has the largest foreign reserves of any country in the history of the planet.

Compare it to Washington, which now has nearly $11.4 trillion in debts, not counting the contingent liabilities of the real estate crisis, Social Security or Medicare.

Whose paper currency do you think should have more purchasing power? Naturally, the yuan. Yet that's not the case — the dollar remains stronger.


But not for long.

I warned of this a couple of years ago, but now the signs are even clearer: Over the next few years China is essentially going to corner the world's gold market.

It's one of the chief reasons I am now even more bullish on gold, expecting the price of the precious yellow metal to eventually exceed $2,000 an ounce.

Mind you, Beijing won't intentionally set out to corner the gold market. But, in effect, that will be the end result.

Take it from me. I've met with central bankers, regulators, and gold traders in China and Asia. I know Beijing's views on the yuan and gold.

You see, Beijing knows that the dollar's status as a reserve currency is soon going to be history. Just like the pound sterling lost its status as the world's reserve currency in the early 20th century.

And authorities in Beijing also believe that as China rapidly progresses toward superpower economic status, the yuan should be a world-class, stable medium of exchange.

They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That's why they're going to back the yuan with gold ... loads of it.