China has the USA in its Crosshairs – Buy Gold and Silver Now

You should stock up on gold as well as silver while you can – in particular, physical precious metals and high-end mining gives.

In the short and medium terms, prices of precious metals will do anything they do. Up a little, lower some and sideways for a while. Day to day, you just never know. The price chart bounces around. But long term? Hold gold. Hold silver.

In fact, today there’s more reason to hold precious metals…

Why buy silver and gold, especially after the sell-down of the past couple of years? Start with the fact that Chinese are purchasing lots of gold. Lots! Here’s the latest chart of Chinese gold imports from Hong Kong, showing strong, steady build up over the past two years:

Click to enlarge

Since September 2011, China brought in 2,116 tonnes of gold. Therefore in just two years, China has imported just under the equivalent of the entire gold reserves of France (Two,435 tonnes) or Italy (Two,451 tonnes).

Or look at it this way. While Western buyers and monetary players disdain gold and sell it – for example, while big Western stakes like SPDR Precious metal Shares (GLD) are liquidating gold holdings – the Chinese are buying gold, and more.

Evidently, the People’s Bank of China (PBOC) is making great on its quietly mentioned long-term goal of creating a gold-backed national currency. That, and China is actually making all manner of bilateral trade deals with a number of nations, in which nations trade with China using their own national foreign currencies and the Chinese renminbi. This slashes the US dollar out of the cycle.

So why are the Chinese so wanting to buy and import gold? Why make bilateral trade deals? Why don’t the Chinese want to use the dollar? Don’t china know that yellow metal is just a so-called ‘barbarous relic’ in the eyes of many Western economists and political gurus?

Recently, we had a stunning glimpse of how the highest amounts of policymakers think in China. Basically, top echelons in China are worried about the overall security of america dollar and, by extension, China’s vast holdings of dollar-based assets.

Strong Rhetoric to ‘De-Americanize’ the actual World

We live in ‘alarming days,‘ according to articles this week in Xinhua, China’s complete news agency of report – in that it represents the views of the ruling Communist Party.

Apparently, the Chinese language chose an opportune time to drift a trial balloon that we’ve been awaiting for quite some time. Communist Party management wants to get a sense of exactly what the world thinks about taking on the US – and the almighty dollar – several notches. As I said, buy silver and gold. Beat the rush.

Indeed, Xinhua minces no words: ‘The destinies of others are in both your hands of a hypocritical nation,‘ meaning the US, of course. And that’s just the start. There’s more, also it plays out like a barbed-wire back rub.

Chinese editors at Xinhua come down hard on ‘cyclical stagnation in Washington‘ over the federal budget. The US government has repeatedly failed to bring spending and debt under control. This has, according to Xinhua, ‘left numerous nations’ tremendous dollar assets [China’s, certainly] in jeopardy and the international community highly agonized.‘

Overall, states Xinhua, the earth has an American-made financial problem that must ‘be terminated‘. Wow. When Chinese communists use the word ‘terminated’, my instinct is to drop what I’m performing and clean my collection of assault rifles. That, and maintain stocks of precious metals like gold, silver and…brass, if you know what I mean.

This China thing isn’t heading in a good path for the US. Don’t take my word on it. Here are plenty of other excerpts to ponder from Xinhua:

‘As U.S. politicians of both political parties are still auto shuffling back and forth between the White Home and the Capitol Hill without impressive a viable deal to bring normality to the body politic they brag regarding, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.‘

*****

‘With its apparently unrivaled [sic] economic and military might, the actual United States has declared that it’s vital national interests to protect in nearly every corner from the globe, and been habituated in order to meddling in the business of other countries as well as regions far away from its shores.‘

*****

‘Meanwhile, the U.S. federal government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly performing things that are as audacious as torturing prisoners of battle, slaying civilians in drone attacks and spying on globe leaders.‘

*****

‘A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests highly regarded and protected on an equal footing… For starters, all nations need to hew to the basics of the international law, including respect for sovereignty and keeping hands off domestic affairs associated with others.‘

*****

‘Furthermore, the authority from the United Nations in handling global hot-spot issues has to be recognized. Which means no one has the right to salary any form of military action against others without a U.D. mandate.‘

*****

‘Apart from that, the actual world’s financial system also has to embrace some substantial reforms.‘

*****

‘What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.Utes. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.‘

*****

‘Of program, the purpose of promoting these changes is not to completely toss the Usa aside, which is also impossible. Instead, it is to encourage Washington to experience a much more constructive role within addressing global affairs.‘

Refuting the Pillars of US Policy

Note that last item, about not ‘completely’ tossing the united states aside. Gee, thanks…I think. On the other hand, the Chinese have reason to worry about US finances. China may be the biggest foreign holder of US Treasury ties, worth a total of $1.28 billion according to public American information.

And note that second-to-last item about ‘a new international reserve currency‘ to replace the buck.

In general, a commentary such as this within Xinhua means that powerful political factions in Beijing – Communist Party and/or army – hold the expressed opinions. Oft-times, a strong Xinhua piece means that the entire Chinese leadership holds the opinion as well as seeks to determine how it performs out around the world. (The news article went viral.)

Looking back, Chinese leadership has never been bashful about criticising the course and wisdom of US policy. Still, over many years, top Chinese language echelons have usually limited severe critique of the US to lower-level players – academics, midlevel ministers, retired military officers or even well-regarded business people.

No senior Chinese agent has ever made a comprehensive, point-by-point refutation of the pillars of US policy, accompanied by the suggestion to rebuild the entire system of global trade and relations in between nations. Until now.

This new ‘official’ Chinese language commentary – from the top level – utterly deconstructs US policy in ways which go back to the end of the Chilly War. Reading between the lines, one can see jabs from US policy as far back as Leave Shield and Desert Storm of 1990 and 1991. Or All of us intervention in the Balkans, and certainly bombing Serbia within 1999. The Middle East conflicts of the past decade – to include the Arab-speaking Spring coups and Libya takedown – are doubtless in the Chinese crosshairs as well.

US policymakers love to change labels on what they do from time to time, because it supports the misconception that the nation is doing things differently under new presidents with ‘new ideas’, implemented by brand new stables of diplomats, generals and admirals. For example, the idea of so-called ‘nation building’ (at the point of a gun, some say) is now branded ‘responsibility to protect’ (R2P). Either way, in Chinese eyes, it’s simply garden-variety old US imperialism.

The Xinhua article criticizes how the US stakes out moral high ground to justify illegal detentions, summary executions by drones and torture of prisoners. At an additional point, the author claims that the so-called ‘Pax Americana’ is a subterfuge to foment instability, American meddling, wars and worldwide chaos justified by lies. No sugarcoating here.

Also implicit in the article may be the idea that Chinese leaders are galled at the uncertainty of return on their trillion dollars and more of US bonds. Apparently, Chinese frontrunners are uncertain about the financial security of US bonds, and they fear a massive loss of value over time.

The Big Takeaways

There are several critical items to note here. The actual Xinhua article is the first in which senior Chinese players have dared go public with a bitter, sharp-edged denunciation of the US-managed international system.

The Xinhua article does not ‘just’ hold on there, either. The authors label American policies as destructive ethical failures. The article openly phone calls on other nations throughout the globe to restructure politics and economics. The next version of global economy will be a remarkable reduction in the role of the US and its dollar as the world book medium of exchange as well as measure of value.

The Chinese are clear that their eventual aim would be to topple the US from its placement of global leadership in most values. The rhetoric betrays intense Chinese frustration with the US. Things have reached the boiling point. From the Chinese perspective, the US government is poisonous for world business, while American military power is unleashed at political whim to promote global instability.

Looking Ahead…

Now what? Nicely, we wait. Chinese leadership will let the Xinhua article have its day in the sunlight and then gauge whether other national leaders share these types of views. Stand by to see a flood of proposals through across the world about alternatives to US hegemony.

We’re looking at tough times ahead for the US position in the world. We’re fortunate to possess the shale energy revolution going on along with a rebirth in technology as well as manufacturing. But can this counter the chronic mismanagement of the country that comes out of Washington, DC? We’lmost all likely all live of sufficient length to find out.

These are interesting times. Or as Xinhua says, ‘alarming days‘. Meanwhile, buy gold and silver.

Byron King
Contributing Editor, Money Morning