Sun Tzu wrote The Art of War 2,500 years ago. Because China declared war on American and London banks you might want to read the most revered Chinese writer on military strategies to understand what is coming next.
All warfare is based on deception. Hence, when able to attack, we must seem unable; when using our forces, we must seem inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near. Hold out baits to entice the enemy. Feign disorder, and crush him.
Let’s update the above for 2012 and our Currency Wars. The dollar is dying. There are bank runs in Europe. The Financial Times said the Europeans had to pull gold out of New York because they needed real collateral.
Ben Bernanke is printing dollars which he will swap by the trillions to keep the European banks running. As I said previously, Bernanke will continue printing money until the dollar, the pound and the euro go to zero value. You will have nothing. The bankers will have everything.
Previously I wrote of the Pan Asian Gold Exchange (PAGE), I said it was a declaration of war by the Chinese against New York and London banks. They will be offering gold and silver futures contracts which will be redeemable in bullion unlike the COMEX in New York and the LBMA (London Bullion Market Association) which have no gold and silver.
Max Keiser and Stacy Herbert, American financial journalists based in Paris, said Bundesbank officials told them that the Chinese have three times as much gold as they publicly admit.
Now let’s revisit that quote from Sun Tzu. Suppose you are a modern Chinese warrior doing battle against America and Europe on the financial battlefields. Instead of – if you are many pretend to be few – let’s say this:
In 2012 if you have a lot of gold pretend to have none until you declare war on the dollar.
We have read of Wikileaks cables saying the Chinese strategy is to accumulate gold until they are ready for the yuan to replace the dollar as the international reserve currency.
The United States has been able to print dollars and buy 8 trillion dollars of real things without giving people anything of real value in exchange other than paper money. Recently the dollar has risen in value because Europeans have been fleeing their banks and the euro.
As I have said before, euro bank notes are clearly marked so that if Italy or Greece quit the Eurozone those euro notes will be exchanged for lira and drachma at half the purchasing power. Anyone who holds Greek, Italian, Spanish, Portuguese, Belgian and possibly French euros is just being silly. So it is not only worries about the bank’s holding bad assets that is fueling the turmoil in the markets. I would get my money out of a sound bank if I thought my currency was to be devalued 50%.
That current bump in the dollar against the euro will not last long. American and European corporations have to start releasing their financial statements soon. The stock markets will continue to decline. Where will the money go?
I think one safe exit is silver and gold bullion. One avenue many will choose for that exit will be the Pan Asian Gold Exchange which is coming online and will soon have investments offered through major American and European brokerages.
Most silver and gold investors expect bullion prices to go sharply higher before the end of the year. The FED has been subsidizing banks who lose money by the billions to short gold and silver. PAGE will stop that soon enough. As I have said before, once silver goes past $50 an ounce there will be no resistance and it will up, up and away.
The key question is this: when will China be ready to offer a replacement for the dollar with a gold backed yuan?
I think they are cautiously planning that for after 2012. They have been doing bilateral currency swaps to promote trade and to gradually reduce the usage of the dollar as a reserve currency. But my opinion is that we will all be overwhelmed by the sudden demise of the dollar, the pound and the euro. The Chinese will be forced to act sooner than they are planning. They might have to jointly issue a new international reserve currency with the Russians that will be convertible into gold, rubles or yuan.
Ben Bernanke is about to lose control of the world. He will print trillions of more dollars and swap them for euro bad assets, but what will he do for an encore?
China and Russia will have to step forward. The Europeans will have to save themselves by ditching the euro. The Greeks will be the first to default. Then the Spanish, the Belgians, the Irish, the Italians and the Portuguese will follow the examples of Iceland and Greece. A northern European euro might remain. Who knows?
Of this I am certain: the dollar will be going sharply down in value. The days of the southern European euro are numbered. The Chinese and the Russians will be forced by a severe economic crisis to step forward. The Chinese and the Russians will see no point in accepting any dictates from New York and London banks.
At this point, a student of Western history would expect our Currency Wars to turn into World War III. Let me state again what I will repeat in an upcoming series of articles: The US military will not allow the Israelis to launch WW III by attacking Iran. If the Israelis had the Greenlight, they would have already have done it.
Related Article: I mentioned this:
China Declared War On Wall Street And The City Of London