With continued propaganda about the demise of China, there is one problem with the bear case — the Chinese have a jaw-dropping $22 trillion in bank deposits.  What this means for gold and China bears will surprise you.

Stephen Leeb:  “A key premise of both Sun Tzu’s “The Art of War”, thought to be written in 514 B.C., and Donald Trump’s “Art of the Deal,” is that if you don’t know where you stand, you’re at a severe disadvantage. Unfortunately, this past week has suggested that Trump and his team need to fully understand where America stands with respect to some critical geopolitical issues. “Make America great again” was a slogan that resonated with a lot of voters. But it could prove disastrous if the incoming administration, in a severe misreading of where America stands today, conflates “great” with “dominant.” 

Particularly disturbing was the suggestion by Rex Tillerson during confirmation hearings that the U.S. should seek to prevent China from access to disputed islands in the South China Sea. This comes on top of Trump’s ongoing comments about China and his nomination of Peter Navarro, known for his anti-China trade stands, as his trade advisor.

I’ve argued before that the U.S. began a long downward slide in the 1970s when Nixon abandoned the gold standard and leveraged our status as king of the hill into the ability to print money with abandonment. That has made us vulnerable in ways that are becoming increasingly evident. However, our position isn’t hopeless. And we could improve it through cooperation with China and yes, even deal making. But if instead we attempt to beat the Chinese, it will be a lose-lose situation…

China wants to prosper. If we can understand and appropriately respond to that distinction, America has a chance to be great again by accepting that it can prosper by being dominant in the West, without seeking dominance in the world at large.

It’s inevitable that fairly soon – possibly even by the end of the year – the renminbi will be a floating currency. Moreover, either on its own or as part of a basket of currencies, a floating renminbi will be at least partially backed by gold. In other words, China is on an inexorable course to exert an economic stranglehold on the East. The world will then likely have two reserve currencies, one for the East and one for the West….More Here