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It's Official: The Chinese Are Selling U.S. Debt... and Buying Gold

By Dr. Steve Sjuggerud
Thursday, February 20, 2014

The latest news is in...
 
The Chinese are selling U.S. government debt... and they're buying gold. So let me ask you...
 
In your opinion, what will the signs be that the U.S. dollar's heyday is ending?
 
What will the signs be that China is giving up on the U.S. dollar as the world's reserve currency?
 
Two very simple signs to look for:
 
•   China shrinking its U.S. dollar holdings.
    
•   China buying lots of gold.

Just this week, we got word that both of those things are happening...
 
Specifically, we learned this week that the Chinese government shrank its holdings of U.S. government debt by $47.8 billion in December 2013, the most in two years. One message from this is that the Chinese government doesn't want to hold any more dollars than it has to.
 
In separate news, China imported, consumed, and produced more gold than any other country in 2013.
 
China overtook India to become the world's largest importer and consumer of gold, importing over 1,000 metric tons of gold that year (a truly massive amount).
 
China is also the world's largest producer of gold... nobody else comes close. Amazingly, China's gold production is still increasing... while the countries in the next three places (Australia, Russia, and the U.S.) are comparatively stagnant in their production.
 
So what does all this mean?
 
Here's what it means to me:
 
•   The data shows more and more that the Chinese prefer gold to U.S. dollars. Chinese buying like this could help create a new price floor for the price of gold.
    
•   It's time to diversify some of your savings OUTSIDE the dollar and into China's currency.
    
•   It's time to add to your gold holdings now – and hold for the long run.

I hope you don't take this advice as extreme. I'm simply describing prudent (and potentially very profitable) actions... based on the latest facts.
 
The new facts are important. And true.
 
It is finally time to acknowledge these facts and prudently position yourself. You could potentially make a heck of a lot of money along the way...
 
So don't wait. Take action. Get some money out of the U.S. dollar and into gold and China's currency... today.
 
Good investing,
 
Steve




Further Reading:

DailyWealth classic: "China desperately wants to return to its status as one of the world's great powers... with one of the world's great currencies," Porter Stansberry writes. "And as befits a first-rate power, China's currency is on the path to being backed by gold..." Learn more in this must-read essay: The Largest Gold-Accumulation Plan of All Time.
 
This week on Stansberry Radio, Porter and special guest Whitney Tilson give their take on the gold markets. You'll learn Porter's No. 1 rule for making great gains in gold stocks. And if you're looking for new investment ideas, Whitney gives away one of his favorite stock picks right now. Click here to listen.

Market Notes


WHAT AN ALL-TIME HIGH FOR CUMMINS MEANS

Today's chart welcomes an old friend to this column. We check in with our "high horsepower" economic indicator... and note once again that things "can't be all that bad."
 
Over the past three years, we've featured dozens of charts that tell us the global economy may not be "booming," but it's not the basket case that the pessimists would have us believe. For example, we've pointed to the surging profits and share prices of hotels, transportation firms, and banks.
 
Another thing we track for this sort of thing is the share price of Cummins (CMI). Cummins is the world's largest independent maker of high-horsepower diesel engines... the kind that power bulldozers, cranes, heavy trucks, mining shovels, and electrical generators. This makes its share price rise and fall with the pace of economic activity. For example, we noted the stock's big breakdown in January 2008, which came well before the economic crisis.
 
Today, however, there's no crisis at Cummins. The stock has climbed from $90 per share to $142 in the past 15 months. Just yesterday, shares struck an all-time high. This tells us businesses are doing lots of driving, digging, lifting, and shoveling... which means things can't be all that bad right now.
 

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