|
In
February U.S. Secretary of State Hillary Clinton traveled to China to
beg for investment while the top Chinese brass boarded planes as fast as
possible to look for deals. I am unsure whether the Chinese were
anxious to secure additional deals or they simply do not enjoy Ms.
Clinton’s dinner company. Either way the point is clear that
Beijing is on the move again and hunting for natural resources. The
great credit
contraction has brought commodity prices to record lows and now is a
prudent time to secure them.
Chinese President
Hu Jintao has been touring Africa with a stop in Saudi Arabia.
Vice President Xi Jinping and Vice Premier Hui
Liangyu got to siesta in Latin America while Premier Wen Jao Bao engaged in a ‘Trip of
Confidence’ to Europe with a fruitful visit with the Russians.
While most of the deals in this round of jet-setting involved oil; for
years the Chinese have been busy securing gold, silver, potash, natural gas
and other commodities.
CHINESE
DEALS
The
February Chinese jet-setting and dealmaking trip yielded about $40B
in loans. Chavez of Venseuzla secured about $6B
through PDVSA which is to be repaid in crude oil. Brazil accepted about $10B and in return
guaranteed China up to 100,000-160,000 barrels per day at market
prices. The oil will flow from Petrobras (PBR) to China National
Petroleum Corp and Sinopec. China’s neighbors, the Russians,
accepted about $25B through Rosneft and Transneft and will guarantee
over the next 20 years about 15 million tons of crude oil. This is in
significant contrast to the meager Chinese investment of $500M in Rosneft’s IPO where British Petroleum took a full
billion and Petronas of Malysia $1.1B.
GEOPOLITICS
The
geo-political implications of securing these natural resources are extremely
important. While China continues completing voluntary deals for natural
resources the Western economies flounder in disarray and chaos while
attempting to bomb natural resources their way.
As Vladimir Putin said, “I was in Beijing at the
time [Georgia invasion of South Ossetia in 2008]. I looked through the
world electronic media. Complete silence. As if absolutely
nothing is going on. It was as if somebody ordered everyone to keep
their mouth shut. To those who organized all this; I can only say
congratulations. Congratulations. You did an excellent job.
The only problem: your results were poor and this will always be
the case because the work you do is unfair and immoral. In the long run immoral policies
always lose.”
For
example, approximately 120,000
in Ireland were protesting the bailout of lying and thieving bankers. While there has been civil unrest in China they have the resources to spend
because of their productivity and savings over the past few decades.
While the Chinese economy will need to continue advancing at least it
is headed that way and have the resources to pay for the Chinese
stimulus plan.
The great
credit contraction will continue to grind on for years and perhaps
decades. When a sound monetary and banking system, like the private GoldMoney
or a public currency like a gold ruble or silver yuan, gains traction
it will be Asia and particularly China that will be well positioned.
After all, it was China’s silver standard that insulated
them against the Great Depression. On the other hand,
the Western economies are atrophying and wasting their resources by
reallocating them from the productive to the unproductive. The
Greater Depression has arrived and China is already preparing to rise as
a phoenix from the global economic ashes.
Disclosures:
Long physical gold and silver. No position in the other mentioned
companies.
Trace Mayer
RuntoGold.com
Trace Mayer,
J.D., holds a degree in Accounting from Brigham Young University, a law
degree from California Western School of Law and studies the Austrian school
of economics. He works as an entrepreneur, investor, journalist and monetary
scientist. He is a strong advocate of the freedom of speech, a member of the
Society of Professional Journalists and the San Diego County Bar Association.
He has appeared on ABC, NBC, BNN, many radio shows and presented at many
investment conferences throughout the world.
|
