Posted: May 06, 2009, 8:16 AM by Diane Francis
“The US should be afraid, very afraid. China is questioning the dollar’s status as a reserve currency and, at US$1,000 an ounce, gold has become the world’s de facto currency” -- John Ing, Maison Placements in Canada.
It is a chilling statement from an expert on both gold and China. But he is just speaking truth to power: In a G2 world (the US and China), he who is the piper calls the tune and China holds a US$2-trillion mortgage on the U.S. and is not happy. This country, along with others who lend money to the U.S. such as Saudi Arabia, will determine the value of the US$ and gold. And they have spoken. They are not buying more US$ treasuries and are buying gold as a new asset class. China announced that it was doing so quietly and recent reports are that the Saudis and others have been buying bullion and hocked gold jewelery from around the world to be melted down in Middle Eastern refineries.