With huge volatility in the gold market, today acclaimed money manager Stephen Leeb stunned King World News when he said that his sources tell him the Chinese are looking to buy another 5,000 tons of gold.  Below is what the acclaimed money manager had to say about this startling development.

 Leeb:  “Eric, I am focused on the tremendous volatility we are seeing in major markets, and also in the US government.  Because of the turmoil in the US we are seeing bonds up one day and then down the next.  We also see gold getting hit for no reason and then rallying the next day.

 But one of the most interesting things we are seeing right now is the weakness in the US dollar.  The US Dollar Index is now trading below the key psychological level of 80.

 “The important point here is that the last time we had a crisis the dollar went up.  Now the dollar is down vs the euro.  We are seeing so many problems in Europe and yet the euro is strong.  That tells me that there are no strong currencies, expect for maybe the Chinese yuan. 

 So there is uncertainty in the currency markets and now we are seeing commodities such as copper starting to get a bid.  Some of the bid for copper is most likely the realization that the Fed is going to have to maintain their bond purchases.  Who knows, the Fed may have to buy the entire federal debt before they are done.  But at a certain point people are going to get fed up with dollars.  What are they going to turn to?  Eventually they are going to turn to gold in a big way.  That’s the only real currency in a situation like this.

 Coming back to the US, shutting down the US government is one thing, but defaulting on US sovereign debt is something else entirely.  I don’t think this will happen because the US can print money, but we are moving closer and closer to that edge….more here