Nathan McDonald says that as Western governments continue to ravage each other, the East, let by China, continues to just chug along…
by Nathan McDonald via Sprott Money News
While Western governments continue to ravage each other viciously, seemingly unable to come to terms on even the simplest of agendas, the East, led predominately by the financial juggernaut that is China, continues to chug along, slowly but surely carrying through on their long term plans.
While we look inward and fight among one another, becoming increasingly polarized and isolated into our various political “camps”, ceasing any form of communication with each other, our economic rivals are racing past us, forming partnerships and making plans.
Russia and China are two such countries that I have often talked about in past articles, highlighting how the West has forced these two countries into a partnership that threatens to overtake the West as the economic powerhouse of the world.
While our financial “gurus” continue to shuffle pieces of paper back and forth between each other, trading digital numbers in ever increasingly quantities, as if they had any real, true intrinsic value.
Russia and China are happily making moves around the world, acquiring physical, tangible assets that will play key roles in the coming economic conflict that the world will inevitably face at some point in our not too distant future.
Although their demand for oil, rare earths and various other forms of assets is seemingly insatiable, there is one asset class above all others that I am particularly interested in, precious metals.
Both countries have made it blatantly obvious that they are not happy with the current “status quo” and would love to see an eventual change. That change being a toppling of the US Dollar as the reserve currency of the world.
This has led to a rapid accumulation in precious metals by Russia, who have forecast their purchases on an almost monthly basis.
Meanwhile, China, who has remained tight lipped about their gold purchases since 2016 has once again made another power play, announcing an increase in “official” gold holdings, a rare occurrence for them.
Adding 1,853 metric tonnes of the yellow metal, Chinese reserves now stand at a staggering 59.26 million ounces, but why now, why after two years of remaining silent, and then six years before that, have they now decided to let the world know that they are continuing to diversify and move into precious metals?
Simply put, it was a warning.
As the trade wars between the United States and China rage on, the latter is simply flexing their muscles and letting the former know that their long term intentions remain the same.
They plan on overtaking the US Dollar, and mounting the Yuan proudly as the reserve currency of the world, with gold playing a crucial role in that scenario.
Recently, the Governor of the Bank of England, Mark Carney, who is closely connected with some of the most influential bankers in the world had a similar assessment.
Carney said China’s yuan could potentially become a future global reserve currency alongside the U.S. dollar, though this was likely to lag behind the increase in the size of China’s economy relative to that of the United States.
“The U.S. economy overtook Britain’s in the second half of the 19th century, but it took until the 1920s before it became a dominant currency in international trade,”
As he states, none of this is going to happen overnight, as no one, not even those who plan to take the throne want to completely over tip the “apple cart”, there is simply too much on the line and too much to lose.
Still, the writing is on the wall and this recent announcement is just one more piece of the puzzle.
The trade wars will rage on for years to come, as both sides continue to make moves and jostle for position, with one side hoping to remain in power and the other to gain the upper hand.
Regardless of the outcome, there is one solid and clear winner in this scenario of countless loser, gold and by extension, precious metals as a whole. Keep stacking, keep preparing.