Commodity Online:

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But back to China. How could China affect the price of gold? We live in China and spend a lot of time with local industry leaders and policy makers. We hear repeatedly that the time has come to think seriously about how to survive the perceived dollar devaluation. In some cases we note serious concern, and in other cases absolute dread over a perceived dollar crash. Over the past six months Beijing has made a series of moves to protect itself against a dollar devaluation.

In a recent "BRIC Summit" in Russia several months ago, Chinese leaders came out strongly in favor of a new reserve currency to replace the dollar (including the IMF’s "SDR" currency). China is also quietly purchasing mining assets and gold bullion. But the government has recently gone further.

According to Financial Sense: As recently as 2002, the private ownership of gold was prohibited in China. You could be jailed if caught with any in your possession. Beginning in 2009, in a stunning about-face, the central government removed all restrictions. In fact, as Mineweb and other sources report now it is actively pushing folks to buy some personal metal, with China’s Central Television, the main state-owned television company, running news programs cum infomercials, letting the public know just how easy it is to purchase gold and silver as an investment.

My comment: I have been writing for years that China was going to eventually spit out the US dollar. It has been obvious for over a year that China has basically been buying any hard asset it can get its hands on and divest itself of increasingly worthless US dollars. The government actually actively encouraging citizens to buy gold and silver and setting up state retail gold shops and doing infomercials also bodes well for the emergence of a mania stage in precious metals. There is one thing that Chinese investors like and that is a market moving higher.

John Polomny
The Real Deal