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Every so often, someone gets the idea to try and corner some market or other, in the belief that they can force the price of their hoardings upwards creating a Worldwide mania of sorts, that can often produce almost unbelievable winnings for those who are able to cash in big and exit, before the rest of the mob catches on. History is littered with such events, such as the famous "South Sea Bubble" in England and "Tulip Mania" in Holland. While some known rogue nations may have already averted to printing counterfeit US Dollars amounting to easier, albeit illegal ways to vast riches, this could be something already helping to devalue the US unit: Rich nations could achieve similar, buying Gold. The Billionaire Hunt Brothers tried to corner the Silver market in 1980 and OPEC effectively has been the architect of a massive squeeze in Oil over the past 6 years forcing the price up 8 fold and garnering staggering riches in the process. Saudi Arabia's revenues rose 44% over the past year alone and most Oil producing nations have accumulated Tens of Billions of Dollars in reserves that added altogether, easily surpasses $1 Trillion cumulatively over the past few years, emboldening many of these nations to want elevate themselves on to the World stage, spending large sums on weaponry.   Back in 1990, Saddam Hussein had designs on cornering the World Oil market and for a while succeeded in briefly pushing the price of oil up to about $60, before his best laid plans were thwarted by a coalition response he probably grossly miscalculated and as a result of the perhaps the greatest military blunder of the 20th Century, not removing him from power then, the groundwork was laid for the oil boom of this decade, that has been greatly exacerbated by 911, the conflict in Iraq and attendant supply disruptions.   Just as in the 1970's, when the first Oil shocks occurred, there was a tremendous transfer of wealth from the consuming nations to the producing nations and the end result was a near hyperinflation of sorts that culminated in Gold soaring to $875 and Silver to $50 helped on by the Hunt brothers designs on the Silver market itself. The problem with the Hunt brothers: Their pockets weren't quite deep enough to pull off a total endgame and the exchanges basically put them temporarily out of business, by raising margins etc.   But, what if the modern day Hunt Brothers were a country? And, not just any old country, but the largest and most populous nation on Earth, owning the largest War Chest in history, with reserves of over $1 Trillion and added to that, the very real prospect that this time around, there's a finite supply of both Gold and Silver and that arguably the World could run out of same within a decade or so.   Then, the potential to corner a larger proportion of the World's Gold could have consequences beyond imagination that in turn could also create Global turmoil, wherein the engine that has driven not only China's growth, but also that of the whole World, namely the United States economy, which has in the process racked up $9 Trillion in debt, could along with the once almighty US Dollar pretty soon become major casualties of some kind of hyperinflation and the greatest bull market ever in Gold, thus emboldening a cartel of nations to transfer these Trillions out of US Dollar denominated assets in a mad panic. Thus far US Dollar over the past few years has been systematically weakened, while Gold has systematically strengthened. But, in the event of a concerted "Gold Rush" by nations bulging with record reserves ends up in some kind of buying frenzy, as the realization of China's true intentions to corner the Gold market become increasingly known. In creating their own 21st Century version of Fort Knox and being able to boast of prestige holdings that could amount to hoarding on a massive scale this could symbolize a new form of Global dominance in Gold.    As long time friend and perhaps one of the most totally committed, diehard passionate Gold bugs of our era Marty Weiss attests:   If China were to lay its $1 Trillion in reserves end-to-end using one dollar bills, the trail  of paper would stretch for 96,906,565 miles. That’s enough to wrap around the  widest part of the earth 3,876 times! Clearly, Beijing’s  coffers are overflowing. In fact, China has the largest foreign reserves of any country in the history of the planet. Compare that to Washington, which owes nearly $9 Trillion, not counting contingent liabilities. Whose paper  currency do you think should have more purchasing power? Naturally, the Yuan.   Yet that’s not the case — the dollar remains stronger. But not for long. Here’s  why ... China is going to corner the World’s Gold Market. I warned of this  nearly three years ago, but now the signs are even clearer: Over the next few  years China is essentially going to buy up the world’s available gold, just as it pouncing all over whatever Oil reserves it can get its hand on. Cornering the  market. In the  process, the price of the precious yellow metal could soar to well over $1,000  per ounce, and eventually to more than $2,000 an ounce.       Mind you, this  won’t be intentional on China’s part. Beijing will not set out to consciously  “corner” the gold market. But, in effect, that will be the end  result. Take it from me.  I’ve met with central bankers, banking regulators, and gold traders in China. I  know their views on the Yuan and gold. I’ve been told that China will be buying  up huge amounts of gold.

You see, Beijing knows that the rest of the world  perceives China’s economy as loaded down with hidden debts and plagued  by corruption. So as China progresses toward superpower economic status,  authorities in Beijing want the country’s currency to be a world-class, stable  medium of exchange.  They envision the Yuan as a major international currency some day, with as much (or more) status  than the U.S. dollar. That’s why they’re going to back the Yuan with gold ...  loads of it.
Consider this:  China has a mere 1.3% of its reserves in gold (600 tons). That’s the lowest of  any industrialized economy! To put it into perspective ...
    *   The U.S. has  nearly 75% of its foreign reserves in gold.

    *   The European  Union has 26.5% of its reserves in gold.

    *   Lithuania,  Mozambique, and even tiny Nepal all have more of their reserves in gold than China. 
Just to increase its reserves to 5% in gold, Beijing would have to purchase $50 billion worth. That  could easily send the yellow metal skyrocketing to more than $1,000 an  ounce. And if China were  to match roughly half of the gold reserves held by the United States,  it would have to buy another $300 billion worth. That kind of buying  would send gold to more than $2,000 an ounce.   We’re getting  closer and closer to the day when this starts unfolding. Why? A few months ago,  China announced that it will plow at least 2.5% of its trade surplus into gold.  That’s a staggering $2.5 billion of brand new demand for gold every  year.  Then, last week,  People’s Bank of China governor Zhou Xiaochuan said China’s govt is  seeking alternative investments to risky U.S. dollars. 
My view: China has  probably already started purchasing gold. That’s one of the reasons gold is now  trading in the $625 range, well above important support levels on the charts  between $590 and $600 an ounce. This is why I  suggest getting a whole lot more aggressive in gold right now. By the time Beijing officially declares that it’s buying gold, it will be too late for reasons below...    Another  Reason Why Gold Can Triple, and Four Ways to Profit: In terms of the  purchasing power of today’s dollars, gold reached $2,176 in 1980. But right now,  it’s trading near $625 an ounce, less than one-third of its inflation-adjusted  high. This alone suggests that gold has much more upside. Even if gold got  halfway to its inflation-adjusted price, it would zoom to more than  $1,000 an ounce, more than a 50% gain from current levels. So is gold  undervalued? You bet it is! Just to catch up with inflation, it
should soar  above $2,000 an ounce. China’s buying would just be the icing on the cake...   Thanks Marty for this excellent and insightful analysis, but as we have also been pounding the table along with Marty, the current state of Global unrest and all that this might entail over the next few years, along with the fact that when the rest of the World gets wind of lead buyers or whales like China, Russia, India and the Middle East start competing against each other to buy Gold and in turn this begins to get increasing media coverage as the price begins to escalate, then everyone from Billionaires to the man in the street could start to seriously get in on the action and with all of the convenient and efficient new ways to invest in Gold, especially with added leverage, things could move very quickly, heightening expectations, especially if Gold production continues to decline...       The stunning rebound in Platinum prices of late which have defied the laws of technical analysis, soaring from sharp contract lows, almost back to new all time record highs is foretelling of what lies ahead. Freeport MacMoran's bid for Phelps Dodge says it all...   They as all recent takeovers are hell bent on increasing inground reserves in a World were these increasingly valuable assets are a dwindling reality. Just as fears of a World running out of Oil sent oil prices soaring: Like the 70's it may soon be Gold's turn to soar. Trade Well From the Desk of Savant

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