Stephen Leeb, an acclaimed money manager, spoke with King World News about China’s increased move toward world dominance and why this will send gold and silver prices soaring.
Leeb: “I am very focused on the East. Everywhere I look in the East, Eric, I see countries coming together. Even countries that have been natural enemies are coming together such as Japan and China. These two countries are now going to be doing shared drilling work in the South China Sea. But I am particularly interested between the emerging relationship between China and India….”
“I have mentioned the fact that China is going to be making major investments in the form of infrastructure spending in India such as railway systems.
Over time I expect these agreements between India and China to broaden out and become very, very extensive. They may reach the level of agreements we are seeing between China and Russia, and that is already nearing one trillion dollars. What intrigues me about China and India, Eric, is that trains, which were definitely agreed to, will make travel between China, India, and the Middle East much easier.
So this train system will make it much easier for China to export goods to Saudi Arabia. As you know, there is already a lot of trade between China and Saudi Arabia. According to a 2012 report from MIT, China’s exports to Saudi Arabia were already 50 percent higher than that of the U.S., and that was two years ago. That report shocked me, and trade between these two countries has grown since that time.
It does suggest the potential for oil being priced in yuan in many more international transactions. We are already seeing energy being transacted in yuan between Russia and China. How soon will it be before China and Saudi Arabia begin pricing energy transactions in yuan? When that happens it will be a game-changer.
So I would keep a close eye on the relationship between Saudi Arabia and China. But I would also keep an eye on the relationship between India and China. Both of these nations want to grow their trade. One way to succeed in this goal will be to continue signing mutual agreements and these agreements are definitely going to include rails. Russia and China are also signing similar agreements.
But the key will be to watch for energy trade between China and Saudi Arabia to be conducted in yuan. And if the yuan begins rising vs the U.S. dollar, it will be game over. This will trigger a huge spike in gold and massive inflation. This situation is inevitable. One of these days people who are not prepared are going to wake up one morning and get hit over the head.
So investors have to own gold, silver, and the mining shares in order to protect themselves against the coming surge in inflation and gold and silver prices. When that time comes it will be breathtaking. The only question is: How much will gold and silver rise? I don’t know but I can guarantee you that gold and silver’s rise is going to stun people when it happens. This will take place when it becomes apparent that the yuan is a stronger reserve currency than anything the U.S. has. So unfortunately this situation will not end well for the United States.”
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