1 July 2008

China Syndrome

The Wallace Street Journal

By David Bond, Editor
The Silver Valley Mining Journal

Another China Syndrome

Wallace, Idaho – Forgive another rant about China, but this one's kind of important, because if what we heard from a well-placed China guy (WPCG) in Vancouver the other day is to be believed – and he's not in the habit of making things up – North American mining shares are about to rock. The conversation was of a backgrounder nature, so we're not going to toss out any names. But here is the gist of what transpired:

WPCG: China has a problem. What it would most like to do is convert its huge holdings of U.S. dollars and U.S. Treasuries into gold.

WSJ: Then why not start buying gold?

WPCG: We can't. The minute that word gets out that China is unloading all, or any part, of its $1 trillion in U.S. paper to buy gold, the game is up. Two things happen: the price of gold goes to $10,000, and the current value of the U.S. dollar falls to about 10 cents.

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