Chinese Economists Favor Gold Over Treasuries

[Master Shake]

In a survey of major Chinese economists, more than two-thirds are reportedly bearish on the prospect of China increasing its holdings of US government bonds, and believe instead the nation should putting more of its hard-earned into gold.

According to a China Business News survey of 70 Chinese economists (including one foreign economist), the exact figure is 71.4% anti-bonds and pro-gold.


http://jessescrossroadscafe.blogspot...avor-gold.html

[hayekvindicated]

Re: Chinese Economists Favor Gold Over Treasuries

The problem for China is that it has little gold (600 metric tonnes - peanuts) and far too much in US Treasuries. If the Chinese start buying gold in significant quantities, they risk causing a spike in the gold price and a crash in the value of US Treasuries.

[Starving Steve]

Re: Chinese Economists Favor Gold Over Treasuries

No-one has ever found a way to climb out of an overloaded canoe without tipping it over.

If China goes for gold, the US dollar crashes, US treasury bonds crash, and the canoe capsizes.

A better move by China would be to buy U.S. assets real cheap.

[flyer38]

Re: Chinese Economists Favor Gold Over Treasuries

Maybe a better bet is for China to buy Gold mining companies for real cheap? Why can't they give cheap loans to Chinese mining companies to fly around the world and buy other mining companies?

[The Outback Oracle]

Re: Chinese Economists Favor Gold Over Treasuries

That's what they are doing!

[pksubs]

Re: Chinese Economists Favor Gold Over Treasuries

If China owns a mining company (or ten), the time horizon to use mining to be the principal method of owning gold, seems long. They can't possibly corner as much production as they would need to replace dollar holdings. What happens then ? Is this a 50 year plan to be the biggest gold holder, or do they need a better plan (for China, not everyone else :cool, sooner?



Table 1: WGC Annual Figures

(tonnes)	2004	2005
Supply
Mine production	2469.0	2520.3
Net producer hedging	-426.5	-131.1
Gold scrap	847.7	860.9
Official sector sales	469.4	660.6
Total supply	3359.7	3910.7
Demand
Jewelry	2612.8	3131.8
Industrial & dental	409.7	420.1
Bar and coin retail investment	397.1	409.2
Other retail	-56.8	-22.5
ETFs	132.6	208.1
Total demand	3495.5	3726.6
Balance (total supply - total demand)	-135.8	184.0

[Chris Coles]

Re: Chinese Economists Favor Gold Over Treasuries

The mistake is to believe that once you are in Gold, and the dollar collapses, you lose. Gold has a quite unique aspect in that you do not lose value once owned. Yes, the primary currency the dollar collapses, but that collapse will only reflect the relative INCREASE in the value of the Gold. And you can sell a bar of solid Gold for any currency. Once in Gold, the choices are all yours so I am also of the belief that the only obvious way forward for anyone holding US Treasuries is to buy as much Gold as they can lay their hands on. The sooner the better.