By Gary Tanashian, GoldSeek

As a US manufacturing person, I have been aware of and had to deal with globalization from day one. First it was Japan, with its revolutionary efficiency, automation and constantly improving quality. There was no use fighting it or complaining about it. The only options were innovate, automate or die. We chose options 1 & 2. This dynamic, with its inherent quality and productivity, is to the benefit of the entire developed planet. Continuous improvement, it’s more than just a corporate buzz phrase.

In recent years, it seems that China is the new Japan… on steroids. What’s more, Wall Street – through famous commodity gurus like Jim Rogers – has got the bit in its mouth and commentators far and wide continually weigh in on the global manufacturing behemoth.

So what do we have here, new global manufacturing superpower, destined through continuous improvement and shear capacity to become THE one stop shop for the world’s manufacturing needs (one happy side of the Wall Street spin) or a gigantic bubble built of limited regulation, massive pollution, exploitation of human ‘capital’ and a noxious Ponzi scheme involving a late-stage consumerist society’s increasingly worth less treasury bonds? This is of course, the dark side of the spin.

I would have to say that the answer involves all of the above. There are many obvious negatives currently in play for a ‘China Story’ that is promoted 24/7 by financial types who are selling abstractions as opposed to boots on the ground knowledge. There are also many positives that time should nurture to the forefront.

On the surface, we have the likes of ‘China’s Round-the-Clock Auto Factories Still Cannot Meet Demand’http://tinyurl.com/nftrh68a, as credit has continued to expand, despite pretense toward fiscal austerityhttp://tinyurl.com/nftrh68d.  Beneath the surface, we have noted short-seller Jim Chanos looking into the books http://tinyurl.com/nftrh68b of China, Inc. In addition, here is an interview in which he not only looks at China, but also the commodity complex so vital and intertwined with its growthhttp://tinyurl.com/nftrh68c.

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By Ambrose Evans-Pritchard, The Telegraph

Stephen Jen from the hedge fund Blue Gold Capital has a warning for those who think that gold has risen far too high, is necessarily in a speculative bubble, and must soon come clattering back down.

Mr Jen is an expert on sovereign wealth funds from his days at Morgan Stanley. The gold story — essentially — is that the rising economic powers of Asia, the Middle East, and the commodity bloc are rejecting Western fiat currencies. China, India, and Russia have all been buying gold on a large scale over recent months.

Why should that stop when the AAA club of sovereign debtors is pushing towards the danger threshold of 100 percent of GDP?

These new players account for almost all the accumulation of foreign currency reserves worldwide over the last five years, so what they do matters enormously.

After crunching the numbers, Mr Jen found that the share of gold in their reserves is just 2.2 percent compared to 38 percent for the Old World (perhaps we should just call them the deadbeats from now on). They would have to buy $115 billion of gold at current prices to raise their bullion to just 5 percent of total reserves, and $700 billion to reach just half Western levels.

The killer-term here is “at current prices,” since any such move in the tiny global market for gold would send prices into the stratosphere.

Mr Jen says that you know where you are in the currency markets — more or less — because there are concepts of “fair value” used by experts. Ditto for the equity markets, where you have P/E ratios (warts and all I might add, since the actual reported P/E of the S&P 500 was a record 141 in September before the agency stopped publishing the figure — a far cry from the forward earnings in vogue).

How on earth do we determine what fair value should be for gold?

“We have no such concept,” Mr Jen said.

Actually, that is not quite true. You can use the dollar monetary base as a proxy.

Mr Jen said China alone accumulated $150 billion in reserves in the third quarter, pushing the total to $2.3 trillion. These are colossal sums. China is amassing almost as much each month as the United States ($63 billion) has built up in the entire history of the country. True, the US understates the value of its gold, but you get the picture. Something big is going on.

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Experts have claimed to have found the oldest gold mine in the world.
Located 46 metres below ground level, the mine was first found by archaeologists near the Georgian capital of Tbilisi in 2005, China Central Television reports.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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By Kim Kyoungwha

Oct. 28 (Bloomberg) — Gold may rise to a record $2,000 an
ounce in the next three years as investors hedge against
“massive” inflation sparked by governments printing money,
according to Superfund Financial Singapore Pte’s Aaron Smith.

“In the next few years, after the deflation cycle, we’ll
see massive inflation,” Managing Director Smith, 30, said in an
interview. “Soon, when you go to buy a cup of coffee, you’ll
pay $20 or $30 because the dollar won’t be worth anything.”

The company’s Superfund Green Gold A Fund, which has more
than doubled since its inception in 2005, has lost 15.6 percent
this year because of higher volatility, said Smith, who joined
in 2002. Gold rose to an all-time high this month as governments
including the U.S. boosted debt to combat the global recession.

“When the U.S. dollar crashes, all the paper currencies
have to crash, otherwise if their currencies are too strong,
their economies will be weak,” said Smith, who issued similar
gold forecasts in May and earlier this month. “Another
excellent buying opportunity for investors is silver.”

Gold for immediate delivery, which touched a high of
$1,070.80 an ounce on Oct. 14, traded at $1,039.32 at midday in
Singapore. The metal has strengthened 18 percent this year,
while the Dollar Index, a six-currency gauge of the dollar’s
strength, fell 6.4 percent.

Gold Forecasts

Smith joins investors including Shayne McGuire, director of
global research at the Teacher Retirement System of Texas, and
Jim Rogers in forecasting higher gold prices. Pension funds will
increase gold holdings as currencies decline, McGuire said on
Oct. 22. Gold will probably top $2,000 in the next decade as the
dollar weakens, Rogers said Oct. 7.

Superfund, founded in 1995 and backed by $1.6 billion in
assets, specializes in so-called managed futures, using its own
trading system to generate buy and sell calls on stock, bond,
currency and commodity futures. Still, the company’s flagship Superfund A, which gained 35.4 percent last year, has lost 24
percent this year, Smith said.

The ratio of silver to gold, currently at 62.35, will be
“cut in half” in the next three to five years as millions of
people in South Asia and China buy the metal as an alternative
because they can no longer afford gold, Smith said. Silver has
soared 46 percent this year to $16.65 an ounce.

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The deal, with Hopu-backed Iron Mining, represents the Sovereign Wealth Fund’s determination to move from financials into mining.

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The mood was boosted by a glowing editorial in one of China’s most popular newspapers

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According to the superpower direct investment into Africa by China rose 78%

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Mark O’Byrne submits:

Gold
Gold closed trading at $1,039.80/oz In euro and GBP terms gold is trading at €699/oz and £635/oz. Support for Gold is currently seen at $1,030/oz and resistance at $1,053/oz.

Gold fell yesterday as oil prices and equities came under pressure and the dollar rose. The dollar has fallen marginally today after the People’s Bank of China said that while the dollar may remain dominant, the share of the euro and the yen should increase in its foreign exchange reserves. Diversification of China’s nearly $2.3 trillion stockpile of foreign exchange reserves is a long-standing policy that aims to avoid short-term volatility, a senior central banker said. Officials in the People’s Bank of China recently stated that they were increasing their gold reserves which currently constitute just some 2% of their entire foreign exchange reserves.

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Sales of gold jewellery will see double-digit growth in China by the end of 2009, it has been predicted.
Speaking to Bloomberg, Hong Kong Resources Holdings chairman Kennedy Wong said his company had recorded a 16 per cent rise in gold and other jewellery in China in the first nine months of the year.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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South African Finance Minister Pravin Gordon on Tuesday called on government departments for sectoral and financial coordination, saying that the country had to explore options for promoting the development of the mining industry.

The mining sector displayed the first signs of recovery in the country’s economy, which is its first recession since 1992, with production rising strongly in the six months to end August, benefitting from a recovery in commodity prices and rising iron-ore exports to China.

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