Monthly Archives: April 2017

Abstract: Barring force majeure events, the die is cast for the twenty-first century: China is on the verge of resuming its role as the largest economy on earth, a position it held for the millennia before the industrial revolution thrust England ahead by 1820 and then boosted America into global economic primacy after 1871 at the dawn of the American Century. Best estimates for GDP at current prices in 2016 by Knoema show the US with $18.56T over China’s $11.39T. At current long-term growth rates, it is projected to race past the US at the $22T mark in less than ten years, depending on exchange rates. The Economist predicts this could happen as early as 2021, despite the recent slowdown in China and America’s robust growth. Indeed, in terms of purchasing power parity or “PPP” measures, China already has the edge with $21.27T over the US with $18.56T. And it is already decisively #1 in heavy manufacturing and construction.
Accompanying this change in economic leadership is a migration of the physical gold industry toward China, as that huge economy likely solidifies its position as the world’s greatest producer and demander of gold. For a number of powerful geopolitical, economic and financial reasons, there is a resurgence of global interest in physical gold for investment purposes that is inevitably tightening up and rationalizing the precious metals marketplace. The institutions of the precious metals industry appear to be gravitating inexorably toward China, known in Mandarin as zhōng guó, translated as the “Center of Civilization” or the “Middle Kingdom”. Living up to its name and fulfilling its destiny, China may soon reclaim its position at the epicenter of world economic power, and it appears that gold could play a significant role in the story. What goes around seems to be coming around, as the cliché goes.
This impartial and objective article presents a scenario suggesting and highlighting a potential but altogether plausible outcome. There is no intention to forecast with any degree of certainty, for such hubris is unwise in an uncertain world. Continue reading →