China and the US Why they are linked

China OWNS much of the U.S, a bold statement I acknowledge but let me qualify that statement.  

I previously identified on the 18^th March (Silver NEWS), that many States hold U.S Dollars as a reserve currency to bolster their own wealth; it’s estimated that China holds nearly….. wait for it… $4,000,000,000,000,000,000 ($3.84 Trillion to be exact..ish) in cash, and an additional $1.3 Trillion in equities. This symbiotic relationship means what bad news for any of these bi-lateral trading partners will bed BAD for the other… oh and there are other States that own U.S debt, take a look at this chart.

Building the pieces of this financial and economic jigsaw, it may now be easier to understand why China is insatiably increasing its Gold holdings month on month, as underpinning the Yuan with Gold will strengthen the currency against fiscal collapse.  Check out my small piece on China on the 12^th Feb, I will be expanding on the ‘China Factor’ in future posts.  In addition to increasing Gold holdings, I fully expect China to reduce its holdings of U.S Debt and U.S currency this year and beyond, especially so as the U.S continues with the Federal Reserve Taper.  This means that the U.S economy while currently ‘addicted’ to cheap and artificially created currency, the Federal Reserve is trying to wean the economy off cheap currency…. Much like a heroin addict uses methadone to kick the habit.  Will it work, well the U.S Government sure hope it does.

Why won’t it work? Should the taper plan work, inflation WILL DEFINETLY occur, and ultimately the economy will contract and may even regress back into recession and there are not enough people in employment to increase the IRS balance sheet, now you see why the situation is such a big mess, and all because the U.S Dollar has been allowed to be printed into existence and backed by nothing! Put it this way if the U.S Dollar collapses, China goes down as well.

Silver

I’m often asked why I am so bullish on Silver rather than Gold as an investment, and my reply is always the same… there are bigger investment gains to be had in Silver over Gold.

Let me explain here…

Gold is priced at $1350 for Gold to double it would take that price to $2700 per Oz, now while I fully expect that to happen, I think it will take a few years.  Now apply that same principle to Silver, Silver is currently priced at around $21 Per Oz, if Silver were to double it would be priced at $42 per Oz….. do you see where I’m going with this? Silver has already been at this price in the past 3 years, (Mar 2011), higher in fact.

Time for a alluring image I think …

In addition to this, Silver it’s more accessible, the low prices mean you can buy more of it, therefore increasing your investment wealth exponentially.

If you are not willing to risk the usual you will have to settle for the ordinary.

Jim Rohn