Jim Rickards: China wants gold so it can share market-rigging power

Section:

8:50a ET Tuesday, May 19, 2015

Dear Friend of GATA and Gold:

In the latest edition of his newsletter, Strategic Intelligence, James G. Rickards elaborates on a point often made by your secretary/treasurer, as last week in an interview with Dave Kranzler and Rory Hall on their "Shadow of Truth" program:

http://www.gata.org/node/15341

That is, China is not acquiring gold because it wants to liberate the currency markets from rigging by Western central banks or because it wants to impose on itself the restraint of a gold standard but because it wants its own power to rig the currency markets.

Rickards writes: "China wants to do what the United States has done, which is to remain on a paper currency standard but make that currency important enough in world finance and trade to give China leverage over the behavior of other countries.

... Dispatch continues below ...



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"The best way to do that is to increase its voting power at the International Monetary Fund and have the yuan included in the IMF basket for determining the value of the special drawing right. Getting those two things requires the approval of the United States because the U.S. has veto power over important changes at the IMF. The U.S. can stand in the way of Chinese ambitions.

"The result is a kind of grand bargain in which China will get the IMF status it wants, but the U.S. will force China to be on its best behavior in return. This means that China must keep the yuan pegged to the dollar at or near the current level. It also means that China can have gold but can't talk about it. In order to 'join the club,' China must play by club rules.

"The rules of the game say you need a lot of gold to play, but you don't recognize the gold or discuss it publicly. Above all, you do not treat gold as money, even though gold has always been money.

"The members of the club keep their gold handy just in case, but otherwise they publicly disparage it and pretend that it has no role in the international monetary system. China will be expected to do the same. ... China will not act in the best interests of gold investors; it will act in the best interests of China."

Rickards' letter is posted at the Internet site of newsletter publisher Bonner and Partners here:

http://bonnerandpartners.com/weekend-edition-why-most-gold-bugs-are-dead...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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