As we kickoff the final day of trading in February, one of the top money managers in the world just warned that today’s takedown in the gold market is all smoke and mirrors because China is preparing to stun the world by reintroducing gold into the global monetary system.

But first, after today’s takedown in the gold market, Dr. Stephen Leeb sent this communication…

“Eric, I do believe that that bounce in the dollar probably won’t last and that the yuan will continue to move higher. Over the past 9 months or so gold and the yuan (52-week moving average) have been in line. All in all, I don’t see more than another 2 or 3 percent (decline), say $1270-$1280.”

This is the reason why Dr. Leeb is so confident that after a brief takedown in the gold price, the next major move will be thousands of dollars higher…

Huge Implications For Gold
(King World News) – Dr. Stephen Leeb:  “If all you knew about the future was that the next few decades would be among the most turbulent in history, that would be enough to tell you to start putting a big chunk of your savings into gold. Well, start putting your money into gold. We are indeed facing a prolonged stretch of unusual turbulence, catalyzed by major economic change. Don’t get me wrong. I’m not forecasting anything like a major war, say, or even an economic apocalypse. But I do believe that we will be tested in a big way, and that no event can be ruled out.

In other words, you can’t take anything for granted. Your first order of business under these circumstances is to make sure that come what may, you have a way to obtain the basics – food, basic materials. That means that you want to ensure access to money that will do what money is supposed to do, i.e., be accepted in exchange for the basic goods you need. And that, as may be obvious to some, and as we’ll review below, means gold. But first, more on the coming turbulence…

Dr. Stephen Leeb continues:  “I’ve outlined before the major reason the world faces a period of turbulence and transformational change. Namely, for the first time, developing economies are now larger in toto than developed economies. They are driving the future. That has huge implications for demand for resources, which in turn has huge implications for gold.

China’s economy by some measures is the largest in the world. And through various initiatives like the Belt and Road Project, the Shanghai Cooperation Organization, and trade agreements with many of the least developed countries in Africa, China is bringing the developing world together into a collection of economies that, with few exceptions, are all growing at the same time. By definition a developing economy has the potential to grow faster and longer than a developed economy. Until now, however, the developing world has developed in a scattershot manner rather than in any synchronous fashion. China, by virtue of its size and its ambitions to create trading partners throughout the developing world, has changed that. It has reshaped the world into one where the portion with the greatest growth potential is now growing all of a piece.

Also significant is that growth in developing countries differs from growth in developed economies. Developed economies are dominated by the service sector. Developing economies tilt far more towards mining and manufacturing, which entails far greater demand for natural resources. The result is that accelerating growth in the largest portion of the global economy, the developing world, will step up demand for natural resources. This enormous call on resources, the greatest in history, is likely to last for at least for the next two generations.

The $67 Trillion Expense
Indeed, the magnitude of resources today’s developing countries will need over the 22 years – until 2040 – is mind-blowing. During that time, according to the World Bank, infrastructure needs for today’s developing world in today’s dollars will amount to $67 trillion, or more than $3 trillion a year. And let’s not forget that the developed world needs to improve its infrastructure as well. Add in those needs and you’re looking at the potential of more than $4 trillion in infrastructure spending a year.

For some perspective on these numbers, realize that today the world is spending about $2 trillion a year on oil. Obviously, infrastructure creation will require huge amounts of resources other than oil. But since oil is still far and away the most important commodity when it comes to building out infrastructure, it provides a sense of what’s involved. It’s estimated that the build-out in infrastructure will entail some 15 million miles of new roads – enough to circle the globe more than 600 times, according to Science magazine. That will amount to more than 2 million barrels of oil a day just for asphalt, a petroleum product. That equates to more than 2% of current oil demand. 

Asphalt, of course, is hardly the only use of oil in road construction. Gasoline and other petroleum fuels are needed to transport that asphalt along with all the other materials used in construction. Estimating the weight of the materials needed in this process, it would require the equivalent of 2.5 million barrels of oil to transport them to the site to build one single mile of road – out of the 15 million miles needed. Roads, which amount to about 35% of forecasted infrastructure needs, are just the start. The remaining 65% includes the infrastructure required for renewable energies, rail transportation, electricity, and more. These, too, will consume massive amounts of existing energy sources, with oil paramount among them……more here