Did anyone hear that by the way? All of you CNN listeners and watchers—Have you even heard of the G-20?  And, while we’re at it, another good question.   Will the price of gold continue to rise as China makes and buys more gold?

Every time the media is scrambling to make something out of nothing…like the Swine Flu…I wonder what’s going on behind the scenes that they’re really trying to draw the attention of the U.S public away from.  There’s been a lot going on in the international financial markets and so few of us really understand exactly what.

Because there are so many distractions in the media, the majority of Americans aren’t even alarmed by China’s calling for a gold linked, international monetary system at the G-20 in London recently. And so few more, know about China’s greed streak for the shiny, gold stuff.

In a recent article, posted by John Browne of Euro Pacific Capital, Browne compares China’s financing of U.S. consumer spending, and thus its own exports, to “vendor financing.” I appreciate this analogy as it really puts China’s buying of U.S. Treasury Bonds into new light for me.

John Browne does say something that I don’t quite understand however, so readers, please help me clarify.

Browne writes, “For a century, American Administrations have relied on the inflationary powers of paper money to finance consumer growth.”

All in all, I tend to agree with Browne’s point of view on the overall direction of the Dollar going downward and the price of gold heading upward. It just makes logical sense if you really understand the implications of all of these Dollars being printed and released into the World Economy under the “Bailout” headline.  As inflation soars, other Nations will inevitably lose faith in the Greenback, gold will become a safe haven, and gold’s price will continue to rise.

Browne sums up the article, and thus his own position on the future of gold prices, by writing, “The biggest winners, personal or governmental, will trade their dollars for gold before there’s a rush for the door.”

However he does mention something that at least sounds a little positive for the U.S. The total gold holdings of the U.S. is said to be 8,132 metric tons while China’s holding are only 1,050 metric tons.  If this is indeed true, is this positive or negative for a gold-linked international monetary system that could be looming on the horizon?

Please comment.

Posted by Corey Curwick on May 8, 2009