As we kickoff this week’s trading with a roughly $2 billion takedown in the paper gold market, it appears that China’s move to dominate the world will include a gold-centered monetary system.
Enter The Golden Dragon
November 20 (King World News) – Dr. Stephen Leeb: “One headline after another shows how the U.S., torn by partisan politics, is making a mockery of itself. Three decades ago, during the Reagan administration, the Senate passed tax reform with 74 “yes” votes. These included a majority of Democrats. Today the legislative process has been depressingly cheapened. If the hastily drafted massive and messy tax bill passes, it will be without a single Democratic vote in the Senate and perhaps the House as well.
President Trump’s trip to Asia provides abundant further evidence of our decline. While Trump reveled in the pageantry, Asian leaders politely made plain that China now calls the shots. The next stage will be implementation of a new monetary system centered on gold, as we’ve discussed often before…
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A striking takeaway from the trip was that China wasn’t once seriously challenged over its takeover of islands in the South and East China seas. Why didn’t the U.S. make an issue of the islands, which are critical to control of the East? Because we can’t. As I’ve discussed before, we simply don’t have the military assets to challenge China’s control.
Some said at least the trip led to China agreeing to work harder to persuade North Korea to give up its nuclear weapons. Really? South Korea’s President Moon Jae-In, a key U.S. ally in the East, has said it’s unrealistic to think the North will give up its nuclear weapons. At best it might freeze further development with complete denuclearization a long-term goal. Meanwhile, President Moon and China’s President Xi have agreed to a bilateral summit next month in Beijing. For good measure Moon invited Xi to attend the forthcoming 2018 Winter Olympics that South Korea is hosting.
It’s true that China sent an envoy to North Korea, a move that the Asian Review headlined as “China likely seeks diplomatic coup with North Korea envoy.” That coup would consist of negotiations between the U.S. and North Korea leading to a “freeze for freeze” agreement. In return for North Korea freezing further nuclear development, the U.S. would cease joint military exercises with South Korea.
But it’s ludicrous to term this potential scenario a win for the United States. Rather, as I’ve said before, it’s what China has always wanted, an outcome that would leave China dominant in the entire Korean peninsula. With South Korean-Chinese relations improving, the odds of such dominance have shot up.
Japan & China
Moon isn’t the only Asian leader cozying up to Xi following Trump’s trip. While the front page of Friday’s New York Times focused on the multiplying sex scandals, page 9 carried a more significant story. Over a photo of all-smiles Abe and Xi shaking hands was the headline: “Wary of U.S., Japan and China Move to Mend Ties – Power Balance Shifts in Asia.” The Japanese press picked up on Xi’s smile, which starkly contrasted with his stony face in previous meetings with Abe.
Hugh White, professor of strategic studies at Australia’s National University, summed up the situation in a recent column in a Hong Kong newspaper. As White put it:
“No matter who is president, the U.S. will fail to resist China’s skillful and relentless campaign to ease America out of Asia and take its place. And that is the reality that China’s neighbours need to start thinking about much more seriously. Whatever their problems with China, America will not be the answer.”
China’s Fierce Military Buildup
Part of China’s “relentless campaign” has been its fierce build-up in its military capabilities. Trump’s silence on China’s activities in the South China Sea amounted to U.S. surrender.
Napoleon Bonaparte allegedly said:
“Let China sleep, for when she wakes she will shake the world.”
China has awoken. And the U.S. has contributed to its awakening not just lately but in ways that go further back.
October 31 marked the eighth anniversary of the death of one of the most important men of the century no one (almost) has ever heard of. Qian Xuessn was a Chinese immigrant who graduated from MIT and went on to Caltech, where he helped develop our rocket technology, including the progenitor of the space shuttle. He also worked on the Manhattan Project. His work on rocketry helped us keep pace with the Germans and led to the creation of the Jet Propulsion Laboratory, where he served as a director. These multiple accomplishments occurred in the space of only about a decade.
In 1950, a victim of the Red Scare, Qian was stripped of his high-level clearance and after five years in detention was sent back to China. It was one of the most monumentally stupid things this country has ever done.
It turned his alleged leaking of secrets into reality. With his leadership and input – which beyond his innate scientific genius included the knowledge he had gained of how the West approaches science – he changed the world as we know it. In a short period of time China went from being a country in which a telephone was viewed as a luxury to a country that in 1964 tested its first atomic bomb. Two years later it tested its first nuclear device, the shortest time ever between fission and fusion.
China Increases Supercomputer Dominance
China has not looked back. It has continued developing its technologies and everything related to them, including its military. Just this week an update was released listing countries with the world’s fastest supercomputers, machines that in many ways represent the pinnacle of technology. China, as before, still has the two fastest machines. What’s new is that previously the U.S. and China were neck and neck in the numbers of supercomputers they owned. In the latest list, China topped the U.S. by a margin of 202 to 143. Our treatment of Qian clearly woke a very awesome giant.
The story helps illuminate the rather amazing fact that China has become a modern country only very recently. While it was the world’s largest economy in every century up until the 19th century, the Industrial Revolution left it far behind.
In my last interview I referred to Richard Nisbett’s seminal work elucidating cultural differences between East and West. The West is more object-oriented, the East more holistic. It seems plausible that these differences also mean Western society is inherently more prone to favor individualism and competition. Experimenting on objects was a path to individual success. In China, a communal spirit prevails over individualism. Experimentation and being best were alien to China’s ethos.
Qian, though, spanned this gap. He showed China the merits of experimentation. The upshot was to place a distinctively Western tool in the hands of a meritocratic civilization, with spectacular results.
Gold & Gold Related Investments
If the U.S. can get its own act together, which unfortunately right now we show no sign of doing, we may have a chance to flourish along with China, whose aim isn’t to crush us but just to secure its own interests. But whether we do or don’t, be sure you have as much gold and gold-related investments as you can swing because a big bull market in gold is the next rocket that will follow from Qian’s influence.”
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