Thursday, September 11, 2014

Recycling the BS for fun and profit

The Gold Bugs are at it again, not that they ever really stopped. The latest nonsense is being sold by some quasi business reporter that claims to have a confidential informant inside the CIA. He claims that the agency is in a growing panic about China's looming attack on the USD using gold.

Supposedly the Bank of China has secretly acquired thousands of tons of gold bullion virtually eliminating the physical gold available on the open market. Stories of heavily armed convoys moving gold through the Hong Kong night are sparking the interest of people who 'invest' in gold. This is much the same as the way nearly naked bikini babes in TV commercials spark the interest of those who 'invest' in drinking beer. Either of these 'investors' are as in touch with reality as the other, well actually a beer drinker could get lucky, the gold investor will just get screwed.

The details of this clandestine gold hoarding by China vary wildly depending on whose particular sale pitch you listen to and what they're selling. Straight up gold salesmen simply predict a shortage of gold and/or the collapse of paper currency. Obama's fault of course.

Some are using it to push the idea that China is near collapse and desperately needs gold to stave this off. These salesmen are selling short positions on companies heavily invested in China since those stocks would plummet. Never mind that China's growth rate could be cut in half and still be double that of the US during the past 33 years. (since Reaganomics became the norm)

Other hucksters are selling bets against the USD by claiming a sudden huge rise in gold prices will drive the dollar through the floor. Since we haven't been trading the USD and other currencies by tying them to gold since Nixon was President, this claim seems a bit silly.

So what is really going on? It's not likely China is going to try anything flashy since they are already making money like they're the only 21st century nation on a third world planet. Are they buying gold? Sure, they buy everything that's for sale and they also mine ridiculous amounts of gold themselves.

We don't know exactly how much gold they have or want to have because we really don't have any hard numbers about anything in China that you can't see in a satellite photo. But while China has moved into the top ten of countries holding gold reserves, compared to the size of their economy they really don't have all that much.

The reality is that gold is just another commodity and while it has countless uses there is an awful lot of it. You could stop mining it now and not run out of it before the giant cockroaches have taken over the planet.

Twitter @BruceEnberg - where you'll learn things like, you can't actually see the Great Wall of China from space, it's really long, but really narrow.

2 comments:

Anonymous said...

My guess is that China is "hording" all this gold because of requirements they have in building electronic products which heavily rely on gold.

It's simple once you look underneath the fear mongering.

Dave said...

Let's think this through. Obama gets his wish and imposes radical Islam on the United States as compelling evidence shows he could do any second now.

The social collapse would be infinite and instantaneous. Hell it's probably inevitable since we twice put someone with dark skin into the White House.

In the chaos there are people hunting you down for your canned goods or possibly because you look like you'll stew well. But wait!! You'll be safe. You bought gold!

Let's see 4 + 4 = Applesauce. Nope, it doesn't add up.