China will back the yuan with gold: Leeb

Marc Howe | November 8, 2012 mining.com

 

Storied investor Stephen Leeb says he is bullish on gold in the long-term due to surging demand from the Middle Kingdom and his belief that China plans to back its official currency with the precious metal.

Speaking to King World News Leeb advised investors to increasing their holdings of gold during any price dips in the near future as the precious metal’s long-term prospects will be bolstered by Chinese demand.

According to Leeb recent data indicates that China has “year-on-year…increased their purchases of gold by a staggering three-fold,” which Leeb believes is part of a concerted effort by China to acquire “something tangible they can trade for commodities.”

Leeb points to the insufficiency of China’s existing infrastructure despite the country’s immense amount of capital spending over the past decade which many believe has led to staggering GDP imbalances, while also noting that China has 1/15th the railway mileage that the US does on a per capita basis.

The renowned investment guru further claims that China plans to revive the gold standard:

China wants gold so they can continue with their plans. They want their currency backed up in gold and they are going to continue to buy it. So gold may weaken, but if it does people should buy it. Once gold starts taking out the all-important $1,800 level, you are not going to have a chance to get into the market. It will not let you in.

Leeb is also bullish on silver, saying that it is the only investment rivaling gold right now and projecting a rise in prices to between $150 and $200.

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