Now, just consider what the impact would be if China were to increase its gold holdings from presently less than 2 per cent of its 2.2 trillion dollars reserves to 6% or 10%. Each 1% increase in gold weighting would mean gold purchases of more than 20 billion dollars, or nearly 600 tonnes.
When governments spend far more than they collect in taxes (large fiscal deficits), and when central bankers engage in reckless monetary policies and, instead of treating the causes of the problems (excessive debt growth), treat the symptoms (deflationary forces), gold as a currency does make a lot of sense.
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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.
