Why has gold soared during this deflationary depression? Maybe it is forecasting that inflation is right around the corner, or that the USA will default and the dollar will lose its status as the world’s reserve currency.
But what if it’s something completely different? What if gold is really forecasting a military confrontation between the USA and China? The Chinese have been buying quite a lot of gold after all, and are challenging the USA in the South China Sea.
At the bottom of this BBC story, you can see a map showing China’s ridiculously aggressive claims of waters all the way down to Malaysia. And there have been reports of Chinese naval vessels exchanging fire with the locals.
Chinese officials have told the USA that the South China Sea is a “core interest”, which means an area they plan on conquering in the future, like Taiwan.
Further reading: Chess on the High Seas: Dangerous Times for U.S.-China Relations.
Note: As far as I can tell, Marc Faber is rooting for the Chinese. Since he lives in Thailand and has an office in Hong Kong, I suppose that he needs to kowtow to the regional power.
MATT……you may find this interesting
the quote below is from Larry Tomlinson of Market Charts
“The cycle of major war and depression occurs in a regular rhythm of 72 years and we are in it NOW and as we progress toward the November election we should be able to have a grip on where that WAR is going to occur. Odds are it will be over OIL in the Middle East and odds are China will be involved. Do we really think we can keep the oil reserves of IRAQ for ourselves? …. if the last 36 year cycle wave was just one big money and credit bubble, temporarily misinterpreted as prosperity, that can produce no more bubbles except for the one that is most feared – another massive bubble in natural resources as a relatively fixed supply of goods meets up with an unlimited supply of paper money.”
Think about this, at the previous 72 year cycle low the summer Olympics in 1936 were in Germany and three years later that country started the war for the 72 year cycle. Seventy two years later the 2008 summer Olympics were held in CHINA, three years later is the summer of 2011.
Raymond H. Wheeler did a study on cycles in war which was described in CYCLES: The Mysterious Forces That Trigger Events by Edward Dewey. His chart had a peak due in 2010. There were four major cycles: 142 years, 37 years, 22 1/5 years, and 11 1/5 years. Later, Dewey discovered four other, shorter cycles. However, the original four cycles were pretty accurate in predicting the peak in wars in the early and late Sixties. The chart also had a 1990 peak which corresponded to the first Gulf War. I believe that chart was published in Cycles magazine.
One other thing I recall is that the period following 2010 had a very low number of wars, which may be good news or it may be bad news. It could be bad news if one of the wars due now is WW III.