Obama came eye to eye with China over the value of the Renminbi and China blinked. Okay, really they said they are going to blink sometime in the future. The Obama administration is sending signals that they are a bit skeptical of this “none movement” movement saying that how much China actually revalues the Yuan is what matters. World markets are all up on the promise just the same.
If you have wondered why Chinese currency has two names, Renminbi means “the peoples currency” (they are communists you know) and Yuan is the old name for money and literally means “round”. Yuan used to have modifiers attached like gold or silver. So what they use now is the Renminbi Yuan.
China has a fantastically high savings rate running 40% of income. China has put a lot of emphasis on gold mining and has over 1100 tons in the government vaults but they also encourage the people to put part of their savings into gold, silver and copper coins or rounds.
It seems that the Saudis have quietly bought 180 tons of gold over last two years, more than doubling their holdings and that is not counting privately held bullion. This is according to a international trade group made up of the big gold mining companies that tries to track who is holding what. Precious metals are doing a gold rush business as the wealthy stock their private vaults with a few pounds now and then which adds up to more than the occasional 100 ton purchase by governments.
I’m not advocating buying gold unless you really have a lot of wealth to protect, it’s a Libertarian talking point that everybody should buy gold and like everything that they say there is kernel of truth buried in a pile of horse apples. If things get so bad that nobody will take currency then they won’t be selling you anything for gold either.
Gold doesn’t make a good hedge against inflation since the price can run counter to inflation unless you can afford to hold it for twenty years. It always balances out, you could buy an excellent man’s suit of clothes for an ounce of gold four hundred years ago and that has been true ever since. You won’t make money buying gold now, the people making money are telling you to buy it now and they are selling. But if your floor is starting to sag from the stacks of canned goods and you still have money burning a hole in your mattress, then gold does take up less space. www.prairie2.com