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China Is Actively Encouraging Its 1.3 Billion Citizens To Invest In Precious Metals

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According to this Motley Fool piece:

"The Untold Story Behind This Golden Breakout

China is actively encouraging its 1.3 billion citizens to invest in precious metals. I have viewed excerpts from state television touting the extraordinary relative value of silver to gold given the large deviation from the historical ratio between prices of the two metals. Because gold and silver are surprisingly small physical markets, even a minor uptick in investment demand could fuel sizeable price increases.

The authors also imply that the relative cheapness of silver, compared to gold, means that there's a significant chance of increases in the value of Ag. Partly due to the dollar being out of favour as the worlds reserve currency.

Quite alarming though is their claim that:

China is considering a ban on rare-metal exports. More than 95% of the world's supply of rare-earth minerals comes from China, so the move places global manufacturers of everything from hybrid cars to cell phones in a difficult position.

As many here will know, rare earth metals have a myriad of obscure, but vital applications.

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According to this Motley Fool piece:

"The Untold Story Behind This Golden Breakout

China is actively encouraging its 1.3 billion citizens to invest in precious metals. I have viewed excerpts from state television touting the extraordinary relative value of silver to gold given the large deviation from the historical ratio between prices of the two metals. Because gold and silver are surprisingly small physical markets, even a minor uptick in investment demand could fuel sizeable price increases.

The authors also imply that the relative cheapness of silver, compared to gold, means that there's a significant chance of increases in the value of Ag. Partly due to the dollar being out of favour as the worlds reserve currency.

Quite alarming though is their claim that:

China is considering a ban on rare-metal exports. More than 95% of the world's supply of rare-earth minerals comes from China, so the move places global manufacturers of everything from hybrid cars to cell phones in a difficult position.

As many here will know, rare earth metals have a myriad of obscure, but vital applications.

there was an article on this in the FT.

they said mongolia (the biggest miners) want to help their economy by banning exports, therefore forcing manufacturers (or refiners) to set up shop in mongolia.

fair enough i reckon.

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there was an article on this in the FT.

they said mongolia (the biggest miners) want to help their economy by banning exports, therefore forcing manufacturers (or refiners) to set up shop in mongolia.

fair enough i reckon.

Maybe, the Chinese are willing their people to move from the $ denominated yellow and orange bits of this chart to the 'Power Money' bit at the bottom. Just in case the $ tanks? It would be a backdoor exit from holding too many $ as well. It would inflate the price of Au & Ag to.

CreditContraction.jpg

Link: The Oil Drum

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If the Chinese are successful in getting a significanty proportion of their people to invest in silver or gold, they won't need to ban the export of it, there won't be any left for us.

Ditto rare earths if Mr Hu He and his mates all want an ipod etc. The price will have to rise much higher to separate it from the Chinese clutches. Damn clever, these Chinese businessmen.

And in so doing, the dollar reserves will, bit by bit, be turned into something that actually has a non-fiat value, without overtly offending the USA.

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If the Chinese are successful in getting a significanty proportion of their people to invest in silver or gold, they won't need to ban the export of it, there won't be any left for us.

Ditto rare earths if Mr Hu He and his mates all want an ipod etc. The price will have to rise much higher to separate it from the Chinese clutches. Damn clever, these Chinese businessmen.

And in so doing, the dollar reserves will, bit by bit, be turned into something that actually has a non-fiat value, without overtly offending the USA.

Their plan seems to be working:

Chinese demand for platinum jewellery surges 30th September 2009

Platinum jewellery demand in China is continuing to skyrocket, according to a new study released yesterday (29th September).

The Shanghai Gold Exchange found that the total volume of platinum bought by Chinese consumers in the first half of 2009 rose by 81 per cent on a year-on-year basis.

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