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It is obvious to anyone with eyes to see, “power” is shifting from West to East.  China is the leader, the epicenter of the East and of course they are the ones “hoovering” up the lion’s share (along with India)of global gold production.  The following map was sent to me by a friend.

I guess I already knew this but what a stark shock to actually see it.

More than 50% of the world’s population living in a land mass of 15% or less of the total.  What exactly does this mean other than having good odds of being able to spit on your neighbor’s house?  I believe it means much more today than it did years ago, let me explain.  Years ago, before we lived in an instant information age and before China/Asia had built up the world’s largest manufacturing capacity, “it meant less”.  I say this because our world today is so interdependent in every way.  Trade and commerce rules the day, and financially everyone is “in bed with everyone else”.  This is a recent development over the last 20 years or so prior, this was not the case.  I am not trying to say trade and finance were not international in the past, they were, what I am saying is instant information now makes “knowledge” (information) more available.  The “information” available has taken Asia from the backwoods and “brought them to the table” so to speak.

The simple truth is we are now facing a “new world order”, not quite the NWO the neocons had envisioned at the turn of the century (or maybe this WAS the plan?)!  The seats at the table are about to change, the “head” of all tables since WWII has been occupied by the U.S..  This will certainly change.  The list of preparations by China to assume their new role is quite long and even the details now seem to be about ironed out.  For example, how do you explain this http://oilprice.com/Energy/Energy-General/China-Hopes-To-Setup-New-Oil-Futures-Contract-By-End-Of-Year.html ?  China plans to “trade” oil in yuan.  They are already conducting ALL energy commerce with Russia to the EXCLUSION of dollars!

Please understand this, with these contracts, they are not going to just “pay” for oil in yuan, they will buy it, trade it, hedge it and speculate on it …in YUAN!  Does anything about this jump out at you?  It should.  Mohamar Qaddafi and Saddam Hussein lost their lives just “talking” about accepting something other than dollars for their oil.  Now, the Chinese are openly and publicly planning to take the world OFF of the petrodollar standard!

Let’s take a quick peak at two recent pieces of Western news.  First, the EU has told 11 nations they must write into law “bail in” rules or face penalties.  Do you understand this?  The EU is demanding the savior of banks be at the expense of the people!  They are also trying to get this done quickly …can you guess why?  Another bit of news was the IMF urging the Federal Reserve NOT to tighten until next year.  Again, can you guess why?  Unsustainable debt …and interest rates of ANY consequence are not compatible.  The West is on its heels on almost every front and backing up while China/Asia prepares…

To wrap this up and the reason for penning this piece, “he who has the gold makes the rules” will soon again be seen as the reality.  The U.S. had an intact industrial base and the largest hoard of gold in the world after WWII, we “made the rules”.  Now, China has built the world’s largest industrial base AND hold the largest hoard of gold in the world …they will soon be making the rules.  This will be felt in many many areas, the most acute I believe will be in the gold and silver markets themselves!  If you cannot see their price suppression or cannot bring yourself to admit it, what comes by way of China will either shock you wake you up.

London and New York where paper contracts regularly substitute for the real thing will be relegated as jokes.  Watching the COT reports or the London “fix” will be useless (it already is).  Once China begins to price oil and gold in yuan, it will be more important to watch the cross currency rates of the yuan versus other currencies as asset prices may “re-set” and then trade in relatively stable “yuan ranges” …it will be foreign currency movements against the yuan which will cause the bulk of asset price swings in “local currencies”.  If China does in fact decide to back the yuan with gold at a new and greatly marked up price, it will then be a great asset to be able to read Chinese.  I say this because it will be their “COT reports” that matter!

Please don’t get me wrong, China may very well start off on the right foot, however, it will only be a matter of time before human nature and greed take over.  Should China and the yuan ascend to a major or even THE reserve currency, I have no doubt whatsoever they will eventually abuse the privilege just as the U.S. has.  The one thing I believe most important is whatever level of gold holdings they “claim” will be far less than what they actually have.  This, the reverse of the “claims” by the West!

Regards,  Bill Holter

Holter-Sinclair collaboration