Today a legend who was recently asked by the Chinese government to give a speech to government officials in China told King World News that the gold market is going to see a massive surge above $2,000 an ounce. John Ing, who has been in the business for 43 years, also spoke about the incredible events happening around the world that will send the gold market skyrocketing.
Ing: “I just put out a report titled ‘Winter Is Coming.’ This report focuses on the opportunity for investors as well the global problems that remain unresolved. For investors, the high quality mining shares have 10-times upside potential from current levels….
Continue reading the John Ing interview below…
“The sentiment in the mining shares is extremely negative, and the long-term relative strength in this group is almost at zero. This is an incredibly rare set up.
In the midst of all this negative sentiment, China continues to buy gold. The Russians also continue to be big buyers of gold. The Russians are now the 5th largest holder of gold in the world, ahead of even China — who’s last reported figures date back to 2009. So central banks are still buying gold and it’s just a matter of time before we get a substantial move higher in the price.”
Below is a small portion of John Ing’s fantastic piece Winter Is Coming:
“Central bankers are supposed to be stewards of our currency which is why pronouncements are watched for hints over the course of the economy or when interest rates will change. What is clear, however is that central banks are all about creating money using financial engineering. After five years the world is awash with some $70 trillion, led by the Federal Reserve’s balance sheet that has ballooned to a record $5 trillion which represents a liability for the state. Money is a commodity whose creator is the state. Central bankers also control the money supply, which has grown in importance as the size of government deficits increase. This money has to go somewhere. A major beneficiary of course has been the Wall Street banks who benefited from near zero interest rates allowing them to take advantage of the “free money”, for arbing, leveraging and placing big bets on the casino-like markets, fueling bond and stock market bubbles. But now with the termination of quantitative easing, markets are worried as to what is next. Volatility is back and bubbles always burst.
Central bankers are caught in a “liquidity trap” of their own making. After printing more of the world’s reserve currency to pay for three rounds of bond buying over 37 consecutive months, this printed money no longer has any effect, sort of like “pushing on string”. Part of the reason is that the central bankers’ surrogates, Wall Street and “City” bankers are sitting on trillions of reserves due to new capital rules (“living will cash reserves”). The ECB, Bank of Japan and Peoples’ Bank of China are key participants in a currency re-alignment, the consequence of helicopter money and serial quantitative easing programs.
The World Order Has Changed
Europe and America seem to be unsuccessfully protecting the old world economic system or order. The European Union is threatened from internal divisions and the fact they are not tied together financially. The Middle East is divided along secular lines. The United States seems to leading from behind destined to two more years of legislative dysfunction. And within this power vacuum, the East has emerged from a regional power to a powerhouse with China’s emergence changing economic fortunes and shifting economic realities. The various orders are plotting divergent courses.
“Every battle is won before it is ever fought”. Sun Tzu’s Art of War written in the sixth century is an excellent primer on eastern strategy with application to wars, business and economics. Sun Tzu says, “know that to fight and conquer in all your battles is not supreme excellence”. It is better to conquer without fighting or destroying your enemy. To win, it is best to take over your enemy (or institution) than to destroy them.
China is flexing its economic muscle by becoming a net exporter of capital allowing them to become more assertive as an economic superpower, laying the foundations for a Sino-centric financial system.
Gold’s Role in The Sino-Financial System
Meantime, America’s debt load is its Achilles heel. China is poised to take advantage of this. The foundations for a Sino-centric financial system have been laid with gold a major part of it. We believe resource dependant China has taken a page from Sun Tzu’s book, using its diplomatic and economic muscle to regain superpower status. China once reigned the world during the early fifteenth century when the Ming Dynasty sailed ships around the world, a whole century before Europeans found America. China consumes most of the world’s resources and sits on the largest cash reserves. Yet, the dollar and lack of global institutions limits its influence. That is changing.
China is the largest consumer of gold and producer of gold, buying most of the world’s gold. We believe building up its gold reserves would be a major step since the move would hedge China’s massive $4 trillion dollar stockpile and importantly solidify the renminbi’s role as one of the world’s reserve currencies. In one week alone, withdrawals from the Shanghai Gold Exchange spiked a whopping 68.4 tonnes. The Shanghai Gold Exchange is one of China’s source for physical bullion. China owns $1.3 trillion of US public debt. To date, China has been patient allowing America to spend more than it produces but how much longer will allow it to debase its currency and debts.
For China, gold is a hedge against a depreciating dollar and negative real interest rates. China knows that paper currencies can be debased and centuries ago, gold retained its value over paper currencies. Asia is awash with dollars. China has more dollars than they want. In addition, with central banks loaded with American sovereign debt, the notion that America can grow its way out of debt has lost credibility particular when the very same arguments in Europe ended in failure. Greece just paid nine percent for debt. Paul Krugman aside, history shows that the reliance on debt to boost consumption doesn’t work. America is just another example of the age old phenomenon in which debt increases due to a credit binge and its spending and quantitative easing has left debt piled on more debt. This is unsustainable. Still markets post daily highs and we are told that all is well. The inflection point, we believe has arrived when creditors worried about the greenback will rush for the exits. It is not so different this time.
The World Gold Council with the China Gold Association recently co-sponsored the first ever China Gold Congress in Beijing. At the conference it was reported that Chinese demand has been growing at almost 2,200 tonnes of gold in 2013, more than previously disclosed. China National Gold, the largest gold producer in China was co-sponsor of the Gold Conference and its president, Mr. Song Xin, endorsed full convertibility of the renminbi with gold as a major step to establishing the renminbi as a reserve currency. Mr. Song also said that accumulation of gold was in the national interest. Backing its currency with gold would accelerate that move.
China’s gold reserves were last reported in 2008 at 1,054 tonnes. This accounts for less than 2 percent of China’s massive $4 trillion of foreign exchange reserves. But where to store its gold? China has been building vault space to replace Western vaults in Switzerland, London and Fort Knox. Rather than depend on the West, China has opened up vaults in Shanghai, with storage capacity of 2,000 metric tons of gold. Recently, China announced plans to open a vault across from Hong Kong in Shenzhen with a storage capacity of 1,900 metric tons. Unlike Germany who must wait seven years to repatriate its gold from the vaults in Britain and the United States, China has been building its own vault space.
We believe the end of QE III (at last), the stealth currency war and China’s insatiable appetite for gold will revive interest in gold. The end of Obama’s QE programs and transition is unknown which is why the market players have headed for the exits. To be sure, higher rates and more uncertainty will follow. In this situation, we continue to believe gold will rally over $2,000 an ounce as investors seek its store of value.
UPDATE – KWN has now released the two extraordinary audio interviews with David Stockman and Gerald Celente and you can listen to them by CLICKING HERE.
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IMPORTANT – KWN has many more interviews being released today.
The audio interviews with Gerald Celente, David Stockman, William Kaye, Dr. Paul Craig Roberts, Andrew Maguire, Eric Sprott, Bill Fleckenstein, Rick Santelli, Michael Pento, John Mauldin, Egon von Greyerz, and Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf — to listen CLICK HERE.