So what does this mean for the future?
1) Thursday's Yuan move was miniscule. There is no way the Chinese are even close to done - they said so themselves. Prepare for quite a few more days like this.
2) Protectionist Senator Chares Schumer (D-NY) is not satisfied. He called today's news a "good first step, albeit a baby step." Schumer has sponsored legislation that would impose devastating tariffs on Chinese imports unless it revalues the Yuan by a meaningful amount, probably around 40%. So if the Chinese don't get a move on it, Schumer and his supporters will likely make their move before the 2006 election.
3) Another hidden story Thursday was that Malaysia also announced it was dropping its own policy tying its currency, the Ringgit, to the U.S. Dollar and would adopt a currency basket arrangement similar to China's. If other Asian nations follow suit, we could see a vicious cycle of Dollar dumping develop. We know the Asians are itching to get out of the Dollar, but politics prevent them from doing so - at least so far. Earlier this year, South Korea announced its desire to diversify some of its reserves out of dollars, only to take back its comments later that day after causing a wave of greenback selling. Keep your eyes on comments from Asian central banks, especially the Bank of Korea and the Hong Kong Monetary Authority.
The bottom line is that today's move, while small and barely noticed, coincides with the beginning of phase two of the gold bull market. Phase one was all about gold's inverse correlation with the Dollar. Phase two began earlier this summer when gold broke off its like to the Euro price and started to rise in every currency. The adult citizens of China, all one billion of them, have recently been given the freedom to own gold. Now the government is actually encouraging them to purchase gold as a form of savings. As the Yuan strengthens against the Dollar and other currencies, gold becomes cheaper for the Chinese to buy. We have long known that the day of revaluation was coming, now that it is here, the light says "green" for gold.
[Proofreader's note: this article was edited for spelling and typos on July 25, 2005]
Note: http://www.321gold.com/...
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Heads Up! Gold Gets Chinese Green Light
Posted on Monday, July 25 at 17:30 by DiogenesContributed By
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RickW
I've been of the opinion for a long time that China's welcome to foreign investors and factories is the old come-on game to establish a top notch industrial system, at the same time deindustrialize North America and to a lesser extent Europe. Then, when the Chinese leaders feel that they're in position, they'll just pull the rug out from under the foreigners and take over their industrial infrastructure. This could be done through legislation, or by forcing on a major depression, which would give them the opportunity to pick up the goods at firesale prices. Their whole educational and economic system is being built up around this plan and should be ready within a few years.
This gold game could signal the beginning of the master plan, as they have been holding up the Dollar with daily purchases of bonds for a long time and they may feel that it is time to let it die.
They also realize that the credit cards of the North American public can no longer carry the terrible indebtedness caused by the fraudulent neoclassical market economy, so they might as well cut off the handouts and start the takeover. We'll see what happens in the next few months ?
There's no question that the present economic system is totally corrupt, unsustainable and will collapse. The question is, when? This is something nobobody can predict. Unfortunately, millions of innocent people will suffer and even die all around the world on account of the collapse of this phoney theory. There could be major violence, civil wars, warlordism springing up, as historical precedents show during and after the collapse of every past empire. I'm not talking only about the American Empire, but also the international monetary empire built on this fraudulent system. Thanks to our miseducated economists and bought up politicians, we're all in the same boat. Ed Deak, Big Lake, BC.