FROM SCRATCH NEWSWIRE

SCAVENGING THE INTERNET

CHINA AND IRAN SWITCH TO GOLD

Posted by Gilmour Poincaree on November 24, 2008

November 24, 2008 – 6:17 am

by daily.pk

Gold rallied sharply Thursday, and is rallying again at the time of this writing on Friday — it’s now Assistant to the President of SINOPEC Group, Zhou Baixiu (2nd L), and Iran's Deputy Oil Minister in charge of International affairs, Hossein Noghrehkar Shirazi (4th L), exchange the agreement protocols during an official ceremony in Tehran December 9, 2007 - Agencies
broken above the significant resistance range of 740-750, and is currently testing the $800 level. While the technical outlook on the daily chart still looks a bit bearish for gold, some major fundamental news of late suggests the bull market may be ready to resume.

Consider:

– Iran recently switched to gold reserves.

– China is massively increasing its gold reserves.

– Perth mint, one of the most prominent gold mints in Australia, has suspended orders.

– Prominent investment strategist John Embry has warned that December delivery contracts of gold may fail — this would expose gold scarcity and send prices upwards.

The China and Iran situation is particularly interesting; their decision to switch to gold reserves suggests a reluctance to hold US dollars and US Treasuries. This would increase the likelihood that deficit spending would prove to be inflationary, as it would need to be paid for via an expansion of the money supply. Moreover, while it is probably too early to say for sure, this could be the beginning of the world market making a run on the US dollar, a scenario which many dollar bears, most notably Peter Schiff, have come to expect in light of the rising deficit spending and the very weak fundamentals underlying the US economy.

I have viewed gold as a key element of any long-term portfolio, and continue to do so.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘PAK ALERT PRESS’ (Pakistan)

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4 Responses to “CHINA AND IRAN SWITCH TO GOLD”

  1. sugartaxi said

    Why would China go for a commodities backed money with such a large population and not a fiat money?

    Do both civilizations battle to gain democratic strength from their Reserve Banks? Or is it a safer option to go with old faithfull- gold? I mean in their current economic strength vs the American Reserve Bank?

  2. I guess that backing their international commercial relations by switching to the gold value doesn’t really mean that such measure should, would or could forcebly be applied within their national territories …

  3. sugartaxi said

    O, right I get it. I didn’t know that there were still economies out there that could. Thanks for that.

  4. I also don’t think that such could be applied within their economies … but, liking it or not, global commercial relations can’t be a subject of the mishaps of financial gambles …

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