Let's face it, why else would a govt want its people to save in gold? The Chinese govt have been advising the people of China to buy gold, even going so far as to produce television programmes explaining the benefits and logistics of doing so. As we know from experience, the ability to print paper, and credit, money by fiat is a privilege held dear by governments - not something they wish, or can generally afford, to let go of. The Chinese govt are not, generally, renowned for kindness to their population so there MUST be a payoff perceived by China for the future. I wonder if the Chinese govt are going to, at some point, allow minting of gold into high-value coins denominated in their currency. There is a precedent in coins sasuch as the Panda Gold Coin. This one, from 1982 I think, has a face value of 500 yuan, which is around $73. A person who bought it at face value, when 1 oz of gold was only around 500 yuan, still has the nominal 500 yuan secured in the coin's legal tender... but the 1 oz of gold is now worth close to 8000 yuan! Heads you hold your nominal value... tails you make a packet if gold goes up. Anyway, a massive conversion of citizen's gold to legal tender would create a solid pm-backing for their currency financed by the savings of the population. It might also give them a real shot at taking the prize of reserve currency status from the dollar as it would increase the money supply - the liquidity available to handle demand for <b>...</b>
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