Home > China, currency > China’s Secret Plot to Dump the Dollar

China’s Secret Plot to Dump the Dollar

March 26, 2011

…and 3 Surprising Places You Should Put Your Money Right Now to Avoid the
Carnage and Prosper.

If you thought the 2008 market freefall was bad, wait until you see what’s on the horizon.

  • The government is spending money like a drunken sailor.
  • Federal printing presses are working at warp speed, cranking out BILLIONS in inflation-feeding bailout dollars.
  • And now China has put a plan into motion that could threaten your solvency… UNLESS YOU TAKE ACTION NOW.

CLICK HERE NOW, and you’ll get immediate access to my latest report, 3 Things You Can Do Now to Survive the Chinese Gold Rush.

Isn’t your peace of mind and financial security worth $79 a year? That’s all it costs when you order your risk-free trial subscription to BIG GOLD today.

Dear Investor,

Typically, the G-20 Summit is about as interesting and exciting as watching grass grow. Perhaps that’s why, hoping few were paying attention, two former communist adversaries selected a recent G-20 meeting in London to announce a plan that, unbeknownst to the rest of the world, had been secretly brewing for years.

And if you understand how this plan works, and the 3 ways to exploit it, you’ll be among the few to turn crisis into profits.

It all started back in 2003. Deep behind the shadow of Chairman Mao’s mural, communist insiders began worrying about the safety of their massive U.S. holdings, which at that time were around $403 billion (almost 25% of China’s GDP).

With U.S. military spending topping $404 billion borrowed dollars, plus careless monetary policies coupled with a $3.9 trillion national debt, the Chinese forecasted that the United States was on its way to destroying the dollar.

So the Chinese did what any sane investor would do. They devised a plan to protect their assets starting with…

One thousand TONNES of gold.

The first part of their plan unfolded recently when China shocked the world by revealing that they control over 33.89 million ounces of gold for monetary purposes. That’s an increase of 75% in Chinese gold holdings over the past six years!

By making its purchases through its State Administration of Foreign Exchange (SAFE) instead of the People’s Bank of China (PBOC), China managed to accumulate more than 1,000 TONNES of gold… without anyone even raising an eyebrow.

And then came the shocking G-20 announcement: After months of behind-the-scenes maneuvering, the Chinese and Russians along with several of their crony nations, have proposed …

Dumping the U.S. dollar as the world’s reserve currency.

On the surface, the communists have politely positioned their proposal as simply a “practical” adjustment in currency. But it’s much more than that. They’re scared to death that the continued stupidity of the United States government could bankrupt them!

Consider these understated comments by Chinese Premier Wen Jiabao at a recent news conference: “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

As the Wall Street Journal reported, China’s call to replace the dollar as the world’s standard, “reflects developing nations’ growing unhappiness with the U.S. role in the world economy.” It’s really no wonder. We’re in the midst of what could be a perfect storm of currency collapse and the likelihood of an inflationary spiral brought on by the mass printing of currency throughout the world.

The result is that we could soon see the dollar collapse down to 20% or 30% of its current value.

That means in terms of buying power, your life savings could be worth a fraction of its current value. Unless you take action now, everything you’ve saved and worked hard for could be virtually wiped out… and your plans for a comfortable retirement a distant memory.

“But aren’t we in a recovery?”
The Chinese aren’t buying it, and neither should you.

The recent run-up of the stock market may have some drinkers of the government’s “Kool-Aid” convinced that everything is fine and the recovery is well under way. But the recent surge in stocks won’t last. In fact, a close look at the facts reveals that recent proclamations of progress are just more white-washing of the truth. For example:

Some banks have reported 4Q profits, but …

192* banks have collapsed since the crisis began, including 140 in 2009 and 37 so far in 2010. Last year was the first time since 1992 that more than 100 failed. Many predict total failures will exceed 1,000. *As of 3/17/10

GDP was positive in the 4th quarter, technically signaling we’re out of the recession. But the truth is…

Income tax receipts are falling. Businesses are reluctant to hire. Quarterly profits are more from cutbacks and layoffs than from increased sales.

$3.5 trillion is sitting in money market accounts supposedly ready to be spent and invested. But …

Americans just aren’t buying. Personal bankruptcies were 27.9% higher than last year and 8.9% higher than last month. 36 million Americans, almost 1 in 8, receive food stamps, a record high for the country.

Job losses were fewer in January than December. Big deal…

January was the 25th straight month of job losses, with employers shedding another 20,000 jobs. And as The Associated Press reports, ” the Great Recession has eliminated 8.4 million jobs. That’s the most of any recession since World War II as a proportion of total payrolls.”

Home prices in some parts of the country appear to be stabilizing. In reality…

The Wall Street Journal reports that foreclosures are still rising at a rate of 1 every 13 seconds. The average new home has been on the market for 12.9 months. It would take at least two years to absorb current vacancies.

The truth is, the U.S. economy is a house of “bailout” cards. No matter how neatly disguised by the government’s smoke and mirrors, it’s a house destined to collapse.

When it finally does come tumbling down to reality, the Chinese are not about to let their massive U.S. holdings – now more than $1.6 TRILLION – be taken down with it. They want to back their investments with something more reliable.

And so do you.

3 things you can do now to weather the coming financial storm.

My name is Jeff Clark. I’ve been with Casey Research for three years. But I’ve literally been building wealth with precious metals all my life.

You might say gold runs in my blood…

I was panning for gold by the age of ten on my family’s western U.S. claims.

I’ve spent my adult life tracking the global market forces behind it.

And I’ve developed a global network of industry contacts that keep me way in front of the big trends in gold, silver, and other precious metals.

I use my unique background and experience to guide savvy investors to the safest, most profitable opportunities that others don’t see. And I’m hoping to help you today.

It’s clear we’re on the front end of what could be the early tremors of the biggest financial earthquake in world history.

Even without China’s plan, the dollar has already lost over 20% of its value in just the past 7 years. And if the rest of the world continues to lose faith in our economy, its value could sink like the Titanic.

But what, if anything, can you as a concerned investor do? How can you protect your nest egg from another free-fall… and even prosper instead?

The answer lies in a brand-new report published by the researchers at BIG GOLD called, 3 Things You Can Do Now to Survive the Chinese Gold Rush.

I’m going to tell you how to receive your own FREE copy of this invaluable report in a moment (or you can CLICK HERE NOW).

But first I want you to understand why the Chinese, Russians, and many other emerging nations are turning away from the dollar… and running to gold… in droves.

The dollar isn’t worth a QUARTER of what it used to be.

“In the short term,
a catastrophic deflation is quite possible. But in the long term, extremely high levels of inflation are now inevitable. The situation is very serious. Gold is the best hedge against both of these things. The better part of your financial assets should be in gold, augmented by well-thought-out speculations.”
 

Doug Casey, November 2009

If, like most people, you feel like your dollar just doesn’t go as far as it used to, there’s a good reason. It doesn’t even come close.

Take a look at the following chart. It graphically demonstrates on paper what you’ve been feeling in your wallet:

The dollar has been on a consistent, downward spiral, losing 80% of its value since coming off the gold standard in 1971.

But gold’s purchasing power has remained rock-solid… and actually INCREASED 400%!

To put it simply, today’s dollar is worth LESS than 1971’s quarter.

You would have to give your children or grandchildren $1 today to buy the same amount of candy you could get for 18¢ back in 1971.

Or if you spent $1 back in 1971, you got 3 ½ times more candy than your kids would get for their $1 today.

You’ve no doubt noticed that the chart also explains why the Chinese… and shrewd investors worldwide… are investing in gold: While gold’s price has fluctuated, its purchasing power has endured.

In fact, unlike with the dollar, your children can actually buy about 4 times MORE candy today than you got with the same gold coin you had in 1971.

You may be thinking, “OK, but the Chinese have only been buying dollars for a few years, not since 1971. Why are they abandoning the dollar now?”

Since fall 2008 we’ve all witnessed how things can go from bad to worse in a hurry. And this could just be the tip of the iceberg. The dollar still has no place to go but DOWN because of massive debt and inflation.

We’re being buried by our own debt.

If the United States were a company… we’d be out of business. If it were a family… we’d be living on the streets. If it were a species… we’d be on the verge of extinction.

But because we’re the United States, we just keep on spending borrowed money and burying our head in the sand.

Here’s the U.S. debt situation in a nutshell at the end of 2009:

National debt $12.5 trillion (but ’09 GDP is only $14.3 trillion)
Government spending FY09 $3.5 trillion (but tax revenue is only $2.1 trillion)
Government bailouts $11 trillion (equals $35,600 per U.S. citizen)
China is moving forward
with plans to diversify out of U.S. assets … China is increasingly concerned about the growing U.S. debt load.
 

Wall Street Journal, Feb 2010

As massive as those raw debt, spending, and bailout figures may be, they are dwarfed by all the unfunded liabilities (those not covered by an asset of equal or greater value) that also must be accounted for:

Medicare/Medicaid liability $36.4 trillion
Social Security liability $15.1 trillion
Total unfunded liabilities $51.5 trillion

All totaled, the U.S. government has liabilities adding up to around $78 TRILLION, yet brings in only about $2 trillion each year in revenue.

This is like owing $500,000 on your house and making $13,000 per year at your job! You could barely live… let alone ever get out of debt.

In fact, if we could reduce these obligations by $1 every single second, it would take 2,471,724 YEARS to pay it off.

The government really has only three choices to deal with these liabilities:

  1. Raise taxes
  2. Cut spending
  3. Print money to allow inflation to rise and dilute the debt burden

Lots of lip-service in Washington is regularly given to items 1 and 2. But everyone at Casey Research is personally betting the only option that will ever come to pass is number 3.

In fact, it’s already begun. And that means you better be prepared for up to…

A 70% decline in the dollar.

No matter how the pundits try to spin it, the United States government is bankrupt. So to keep things afloat, they’ve started printing enormous amounts of money.

The following chart paints a clear but grim picture of the U.S. monetary situation:

It’s impossible to miss the astronomical and unprecedented influx of currency that began flooding the market in fall 2008. Within just one and a half years, the U.S. monetary base was artificially inflated from $800 billion to $2.2 trillion. In other words …

Out of thin air, the U.S. government created 2.75 dollars for every dollar that existed in the entire country just one and a half years previous.

This is not simply the largest currency expansion in history. It is a STAGGERING DEVALUATION of the dollar.

“When the dollar collapses,
it’s not going to go down 10%, I’m talking 50, 60, 70% decline in the value of the dollar.”
 

— Peter Schiff, President of Euro Pacific Capital, January 2010

Even freshmen economics students understand you simply cannot make such a drastic move without expecting consequences.

And in this case, as soon as banks begin lending again, every dollar bill in your pocket will buy you significantly less and less.

With trillions of dollars of their expanding economy at stake in U.S. dollars, the Chinese would be in for a setback that could push them back 100 years if the dollar tanks by even 50% or more. And they’re not about to let that happen.

Capitalize on the Chinese gold rush of 2010.

The Chinese have the motive, means, and opportunity to buy all the gold they can get their hands on.

They have the motivation: Considering their massive holdings of dollars and the very real likelihood those dollars are going to lose much of their value, China is highly motivated to buy tangible assets like gold and other precious metals.

They have the means: China has $1.6 trillion of its massive reserves denominated in U.S. dollars that it is anxious to part with. $227 billion is a drop in the bucket compared to the amount of money China has available.

Now consider what could happen to the price of gold with the world’s largest emerging economy 100% committed to backing it with gold.

If you act now, you can not only protect your nest egg from devaluation, but can be poised to capitalize on a surge in the price of gold unlike anything seen before.

Could $5,000 gold be too low?

There’s much more than simple supply and demand at work when it comes to the likely future price of gold. The rapidly approaching devaluation of the U.S. dollar is another major force that could push the price of gold to record levels.

The U.S. dollar index, a six-currency gauge of the greenback’s value, recently showed that for every 1% drop in the dollar index, gold has risen 4.9%.

If that approximate percentage holds over time, and the dollar were simply to return to its March 2008 low of 71.30 this year – just a 4.6% drop from current levels – this would indicate a rise in gold of 22.5% and a price of about $1,478 an ounce.

But the long-term scenario is much more dramatic.

  • If you believe the dollar will lose half its value from current levels, this would indicate a gold price around $4,164.
  • If you believe it will lose 75% of its value, gold would reach about $5,642.

Commodities bull Jim Rogers told Business Week that he expects gold to “be over a couple of thousand dollars an ounce sometime in the next decade.”

Doug Casey has predicted a $5,000 gold price.

And when price inflation finally bludgeons the economy, or when citizens from across the globe begin their own run on gold, $5,000 gold could actually be too low.

3 things you should do now to protect your life savings
and position yourself for profits of 50%… 100%… 500% or more
from China’s inevitable run on gold.

The evidence is in. The stakes are astronomical. And the game has already been set in motion. Now it’s just a matter time before all the players align and begin their momentous march towards what for some will be financial Armageddon.

But for the fortunate few, like you, who have been warned, the coming currency crisis and gold rush could mark the beginning of one of the most prosperous times of your life.

Everything you need to know to protect yourself and prosper in the coming crisis is spelled out for you in my exciting report, 3 Things You Can Do Now to Survive the Chinese Gold Rush.

Get immediate access absolutely FREE when you CLICK HERE NOW.

Here’s why you need to have…
and I want to give you…
this Free Report now.

The evidence is crystal clear: the dollar – and our entire economy – is soon going to put you in the fight of your financial life against inflation and devaluation.

Fortunately it’s been proven time and again that there’s a perfect weapon to help you prevent and overcome those enemies of your prosperity: gold and precious metals.

But it’s up to you to prepare, and invest, accordingly. As one of America’s most trusted advisory services, BIG GOLD will help you do exactly that.

Just click here now to accept a risk-free trial of BIG GOLD. You’ll immediately receive FREE access to your report, 3 Things You Can Do Now to Survive the Chinese Gold Rush. It’s yours to keep no matter what.

I’m giving you this invaluable new report as your FREE introduction to BIG GOLD, so YOU can position yourself to prosper before it’s too late.

As you’ll see in your FREE Report, the key to cashing in on the coming crisis is taking these 3 critical steps now.

Step 1. Have plenty of cash on hand.

Everyone here at Casey Research believes the coming crisis will be precipitated by a huge buying opportunity. When the time is right (and as a subscriber, I’ll make sure YOU are the FIRST to know by a mile), the more cash you have to deploy, the more profit you’ll make.

“The consequences of a
rapidly declining dollar are not yet fully understood by the American public. The long-term significance has not sunk in, but when it does there will be political hell to pay in Washington. Our relative wealth as a nation is measured in dollars, and the steady erosion of the value of those dollars means we will all be poorer in the future.”
 

— Congressman Ron Paul, May 2006

Until it’s time to buy, keep your cash in one of the 4 places I use… and recommend in your Free Report… for the best safety and liquidity.

Get the specific details on these 4 money fortresses that offer the best safety and liquidity for your cash when you CLICK HERE NOW for immediate access to your FREE REPORT, 3 Things You Can Do Now to Survive the Chinese Gold Rush.

Step 2. Own stocks that are poised to skyrocket with a falling dollar.

As the dollar falls, it’s not just gold and precious metals that increase in value… so do stocks of the companies that mine them.

For example, in the year or so since the stock market crash in October 2008 – when the Dow and S&P indices each collapsed by more than 40% – this sampling of precious metals stocks, all recommended for our portfolio, skyrocketed.

Silvercorp +223% Yamana +128%
Eldorado +196% Lihir Gold +89%
Kinross +74% Agnico-Eagle +108%
Randgold +132% Minefinders +102%

As you can see in the following chart, even considering 2009’s market rebound, my gold and silver stock recommendations outperformed them by a wide margin. And that means more money in your pocket.

I’ve discovered two more stocks that appear perfectly positioned to explode with profits when the coming crisis gets fully under way.

You’ll get complete details on both of these hot precious metal stocks in my latest report, 3 Things You Can Do Now to Survive the Chinese Gold Rush. It’s yours ABSOLUTELY FREE for immediate access when you CLICK HERE NOW.

Step 3. Keep 1/3 of your investable assets in gold.

It has always made sense to own at least some gold because it is the ultimate safe haven: it’s REAL money; and a gold coin taken anywhere in the world will always have value and can be readily exchanged for cash or goods.

“Made considerably more money thant I ever have…” I appreciate your information, talent and honesty. In the last year I have made considerably more money than I ever have … — R. McCleery 

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“The best I know of…” Casey Research is the best I know of. I have been a subscriber for a number of years, with gains that average over 200% –
John H.

“The first dollar I invested is up over 1,000%!!” Over the last seven years my investments have risen by an average of 42.9% per year… The first dollar I invested is up over 1,000%!! Keep up the great work. — J. Gibbons

“[One] issue alone was worth the money.” In January I got your annual review and was blown away. That issue alone was worth the money. Then today I received Issue 2 and again am overwhelmed. Jeff’s analysis and writing are fantastic. I know I need to add to my gold holdings and this guidance is just what I needed — T. Hamm

“Financial north star …” Let me say thanks for all you do. Your newsletters, observations, and advice are my financial north star. — R. Barre

Now that China has declared its intentions and already begun replacing dollars with gold, it’s a whole new ballgame. When they start dumping dollars in full force – sending the price of gold skyrocketing and crushing the value of the dollar – owning gold is going to be your financial insurance.

To prepare for the coming crisis… to safeguard your purchasing power and standard of living… and to be positioned for triple-digit profits when the price of gold skyrockets… I recommend you have 1/3 of your assets in gold right now.

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  1. March 26, 2011 at 1:05 pm
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