Gold and silver have been locked in multi-year price channels for a couple of years, so the big question is, What will send gold and silver prices soaring? China has been accumulating a lot of gold over the past decade. Furthermore, no one with any sense believes their “officially” reported reserve numbers, especially since I had been blogging for years that their official gold reserve data was nonsense. The Chinese government themselves substantiated my claim in 2015 by increasing their reserve numbers overnight by 60% to 1,658 tonnes from “official” reserves of 1,058 tonnes, the gold reserve number that the PBOC reported for six straight years prior. Even when this updated number was reported, I again, at that time, stated that such a number was a gross underreporting of their real reserves, as Chinese government officials had zero desire to reveal the strength of their hand in the middle of a global currency war. For the past two years, the PBOC again has failed to update their gold reserve data, and it still stands at 1,658 tonnes though many have speculated that the real number is upward of 20,000 to 30,000 tonnes based upon internal nationwide production that never leaves China, in addition to the extrapolation of Hong Kong gold import data that is publicly available. Global bank analysts, that tend not to look at real data that is available to estimate China’s real gold reserves, blindly report “official” data and used China’s reported 1,658 tonne number a couple of years ago to call the figure underwhelming, and in increase that would have no bullish effect on gold prices, simply because it fits into their unrealistic narrative that they wish to propagate to keep gold prices suppressed.
However, unlike the mass financial media of Reuters and Bloomberg and big global banks, I believe that the alternative China gold reserve figure that has been floated, a number that is in the 20,000 to 30,000 tonne range is reasonable, which begs the question, “What does China plan to do with all this gold?” The easy answer would be to back the renminbi, but I think it goes a little deeper than this simple answer. I believe that China will use gold to back the renminbi in all trade associated with its OBOR (One Belt One Road) project, that will build massive infrastructure to connect 65 countries economically across Asia, the Middle East, Europe and Africa, in which 62% of the global population resides. If China can usher in the adoption, across 65 countries, of a gold-backed currency, then this currency will become a global currency even if the remaining 48% of the global population entirely ignores it. I also have a second theory regarding China’s potential use for their alleged massive tonnage of physical gold, one that I have not yet heard proposed anywhere else, that could help catapult gold as an essential part of the global currency system even outside of any designated OBOR infrastructure.
In any event, the progression of OBOR has been a struggle thus far, as other Central Bankers that have held the entire world population hostage to its fiat currency system likely recognize the key role that the development of OBOR will play in determining the eventual winners of the current global currency war and have convinced many NATO nations to boycott the development of OBOR up to this point. In my estimation, NATO and international banking organizations are likely controlling the narrative of non-participation in OBOR by the threat of pulling military support. But should the development of OBOR pick up steam and should China’s leadership reveal gold’s role in the new OBOR economy, as I believe gold will play a key role in ensuring that Chinese currency is the primary currency of the OBOR economy, this event would send gold and silver prices soaring. Is this event imminent? Likely not. This event will take time. However, there are a number of other ways that China could still contribute to a much greater fiat currency price of gold and soaring gold and silver prices, including revelations of their true gold holdings over time. For example, during their next update to their “official” gold reserve numbers, they could step this number up from 1,658 tonnes to 5,000 tonnes, a considerable jump in the “official” number that would be enough to boost gold prices, but not reveal the entirety of their holdings.
And as I hinted at above, there is another possibility being explored by the Chinese government right now, using gold as the basis for this event, that could possibly help catapult China to the top of the mountain in the global currency wars that are being played out right now as fiat currencies continue to die all around the world. I’m still researching this topic, so don’t want to speculate any further until my sources are able to send me some more concrete information about my theory.
Still, it is indisputable that Central Bankers have done what they do best all around the world – rapidly erode the purchasing power of fiat currencies in every nation in which they operate. The US dollar has been in a nose dive all year long and now is at 27-month lows. In Venezuela, the Venezuelan bolivar is worth just 1/1000 of what it was worth in USD just 17-years ago. Think about those last two statements. The US dollar has been in a free fall all year long and is now at 27-month lows, and despite this, the Venezuelan bolivar’s purchasing power has free-fallen at such a clip, that is has still managed to lose massive amounts of purchasing power against a nosediving US dollar. This fact has led to all-time high levels of dissatisfaction with the government in Venezuela, chaos, and citizens continuously fighting the police State in Venezuela. This fact should also compel every one in the entire world to convert a good deal of their fiat currencies into gold and silver, regardless of the absence or presence of soaring gold and silver prices. Consequently, even if China continues to play chess while the rest of the Western-hemisphere Central Bankers play checkers, and therefore continue to hold their cards close to their chest and do not liberate gold’s price any time soon, Central Bankers will self-destruct on their own to liberate gold’s price, as self-destruction is their mission.