Outpouring of Gold from the West to East Continues - Nathan McDonald

January 7, 2016

The West loves fiat currency. Fiat has been and still is the West’s source of power, but for how much longer? The United States has had the benefit of possessing the reserve currency of the world for far too long, in my personal opinion.

With this benefit, the US has had the ability to expand its military might around the world and now possesses bases in so many foreign locations that a full list of them would shock most people.

Although, this fiat system has come with a price. The West, and especially the United States, now finds itself in a position where fiat is having less and less of an effect. Its power is waning, and soon enough the baton of power will pass to the East (if it hasn't already, as many speculate).

China knows what’s going on, and it also knows that its currency is in position to take over as the reserve currency of the world. With that, China will inherit the financial power and benefits that come along with the post. This should come as no surprise to anyone, since, for years, China has been circumventing the US dollar and going behind its back to create trade deals that settle in yuan.

In addition, in the past, China has actively campaigned to be included in the SDR currency basket, which is issued by the IMF. This campaign recently resulted in a success, despite China's reluctance to release crucial information about its reserves.

Further proof of the West's waning power is seen in the massive outflows of gold, the true foundation of the currency markets, into the East.

The scary fact is this: the drain of gold from the West to the East continues at a rapid pace. In the first nine months of 2015, it was reported that the United States exported 380 metric tonnes!

The main beneficiary of this outpouring of gold was – you guessed it – China, which saw 19.3 metric tonnes of gold come in from the US. The second largest benefactor was Switzerland, a country with a staunch reputation for being a prudent money manager.

This outflow of "true money" is even more startling when you look at US mine production numbers, which indicated that the US produced 155 metric tonnes of gold.

No matter which way you look at it, the United States and most of the West are declining. Their economies are stagnating, their employment rates are dismal and their savings are hollowing out. It is only a matter of time now. Another crisis is on its way, and the opportunity to change course grows thin.