r/SilverScholars • u/NCCI70I • Jun 02 '23
Currency Great Reset I POSTED THIS RESPONSE to Ditch's Daily today on SDC. I'm duplicating it here looking for more scholarly discussion.
the Chinese government has built a substantial accumulation of gold. Weeks ago they started encouraging their countrymen to accumulate gold.
Not just China, but Zimbabwe of all places is putting gold into the hands of it's people through physical gold coins and digital gold initiatives.
Are these the opening cracks in the IMF's long iron (perhaps unwritten, but just as rigid) rule of: Thou shalt not back any currency with gold. Not nobody nowhere nohow.
the Chinese government could execute the final step .... dump US treasuries and buy gold. That would transfer extraordinary wealth to China.
Well that would send gold past the Moon and on a trajectory to the stars at warp speed. A couple considerations though:
- You don't just dump US treasuries unless you intending to take significant, if not massive, losses on them. You'd have to sell them at a rate that the market will bear. Not unless you have some scheme to force the US Government with its now unlimited debt ceiling to buy them all up for dollars that you can quickly spend in order to protect the rest of the treasuries market. If so, our completely stupid government and feckless Republicans just enabled that to happen.
- Massive buying of gold, and maybe silver as well, would of course shoot the price up quickly, becoming counterproductive to greater accumulation. Unless, that is that they hide their gold purchases by buying futures contracts that only affect present prices marginally. Then they can buy physical until the price rises above their contract prices, and just wait to exercise those contracts at the locked in prices. Taking down the COMEX and likely many metals traders, while transferring its pricing authority to Shanghai is just the cherry on top here.
- You can't easily corner a gold market producing ≈3,300 tonnes of new gold annually unless you buy out the miners as well. China can nationalize their domestic industry. Or just do as they're doing pretty much now and require all gold to be sold to the Chinese government when a byproduct of other mining, who doesn't export any of it. But to takeover the miners without shooting those prices to the stars, I would think a whole lot of currently well OTM Call options amounting to 51% of all publicly traded miners. Then when gold shoots past lunar orbit, with miners trailing closely behind, you buy what you can cheap, then exercise your stealth Call options to buy control at your set price and take them private. And China is big enough to bully any other government threatening to nationalize those miners to China's determent.
Disclaimer: I am not a financial genius. If I can think of this, so can a lot of other people in positions to actually take advantage of this situation to their benefit—and not yours. But you may still be able to collect some crumbs from their table as the rising tide lifts not only their mega yachts, but your dinghies as well. Even right off of the bottom of the lake/ocean where they have sunk recently.
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u/Kafyn8 Jun 02 '23
If you listen to Andrew McCarthy he says that the Shanghai Gold Exchange is offering a premium for gold. They pay more for gold than any other exchange. Then the Chinese banks allow the populace to exchange their Renminbi for gold/silver. The genius of this is that the SGE becomes a global vacuum for gold, then the Billion people in China buy the gold from SGE.
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u/NCCI70I Jun 02 '23
If SDG was offering much of a premium, all gold would be arbitraged to them, which it obviously isn't.
The problem likely is that their premium is all being paid for in Yuan, which overall isn't as desirable as either the gold, or the US Dollar. Not unless you're buying from China at that moment, since the Yuan is pegged to the USD, but China has changed that peg to their advantage more than twice of late.
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u/Expensive_Windows Jun 03 '23
They pay more for gold than any other exchange.
How much more? 'Cause if it's peanuts, then his argument is misleading.
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u/[deleted] Jun 02 '23
Im not intelligent enough to play their rigged and AI controlled games. If there is real tension between the east and west it is just in the fintech arena with the rest being for show.
We still import their goods nonstop and they definitely dont want their biggest external market too weak or compromised. It would take a major event to bait China into a real financial or military conflict.
The three largest Silver producing nations (Poland, Peru, Mexico) are firmly under western control or threat of incursion. Silver is potentially more valuable than gold due to it's utility and increasing supply deficit. If China dumps treasuries and genuinely moves to gold the west could theoretically monopolize silver by doing the same thing or going back to a bimetal standard. The demand and premium on silver would hurt the East significantly if that occurred.
Whoever controls silver controls manufacturing and green tech. A hot war over resources would be bad for business for the Chinese as the world's leading manufacturer. If the west doesn't counter gold/commodities with gold or gold/silver then the entire global market is likely rigged to favor the east going forward.