Dear Friends,

The more we get reports like this out of China, the more we should consider that this is indeed the official line of the government and that this is indeed exactly what is taking place although very quietly, unannounced in advance (remember the classic by England’s Gordon Brown?), and with no fanfare whatsoever when it comes to gold.

China will make their purchases when prices are weak at a time when the West is intent on throwing it away.

Incidentally, note the blurb about their acquisition of supplies of energy and other commodities as both Jim and Monty have been saying for year after year.

Trader Dan

UPDATE 1-China should buy gold to hedge dlr fall-researcher
By Zhou Xin and Alan Wheatley BEIJING

June 25 (Reuters) – China should buy more gold because the dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday.

Li Lianzhong, who heads the economic department of the Party’s policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets.

Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities.

‘Should we buy gold or U.S. Treasuries?’ Li asked. ‘The U.S. is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice.’

There is no suggestion that Li, even though he is a senior researcher, was enunciating an agreed party line.

However, a debate is swirling in China about how the country can reduce its exposure to the dollar and to U.S. assets in case America’s ultra-loose fiscal and monetary policy rekindles inflation and erodes the value of the dollar and U.S. Treasuries.

More…