Eric Dubin Discusses China On “Operation Freedom” Radio Show; Massive Leap in “Declared” Gold Holdin

I was honored to appear on yesterday’s “Operation Freedom” radio show with Dr. Dave Janda.  We talked about the high probability 2014 will see major developments from China on the economic front.   In particular, we focused on gold and what I believe will be a very surprising rise in the Yuan versus the dollar — by 6% or more, next year.

Consensus expectations are for the yuan to see roughly a 2% appreciation against the dollar.  To the best of my knowledge, I’m the only analyst forecasting this upside surprise for 2014.  The Chinese government certainly isn’t giving any hints of a big move.  They are, however, extremely vocal about further liberalization of the capital markets, and about their long-term plans to evolve away from a dollar-based world economy — something Dave and I discuss on yesterday’s broadcast as well.

Simply put, China is now ready for the yuan to rise more quickly.  By letting the currency rise, it will greatly help Chinese policy makers deal with a whole host of domestic problems.  It will lower inflation given that all imports of dollar-based commodities and other goods will decline in price.  China’s primary tool for keeping a lid on inflation has been restrictive policies on bank reserves and lending.  When yuan appreciation of 6% or more translates into a net inflation reduction of 2% or more, that will give China more flexibility to ease credit, something that is desperately needed right now given tight liquidity problems being reported in China on almost a weekly basis.

To listen to the segment with our interview, click here.  Dr. Janda consistently interviews very outspoken guests.  Bookmark his website if you have yet to do so:  DaveJanda.com   Surfing his site from time to time and catching his radio show, “Operation Freedom,” is well worth your time.