There are critical moments in time that can change history. This week I will talk about two lines which are extremely important, as these two lines will change the world for years to come. The first is a Chinese Gold Line which is linked strongly to China’s history. That line has an important connection with what will happen in the world in coming years. The second line is a Maginot Gold Line which will also shape the world for many years or even decades.
The history of China and gold is fascinating and even more so when Japan’s looting of Chinese gold is added to the story. Japan was interested in the Chinese gold since the Sino-Japanese war in 1894. Japan spent time and resources on the Manchurian gold exploration from that time to the end of WWII. Japan is said to have looted considerable amounts of gold from mines in Northeastern China. Not only that, but in 1947 as the Civil War in China was raging and Mao and the communists pushed Chiang Kai Shek out, the Japanese invaders stole 6,600 tonnes of gold from the Chinese capital Nanking. This is a lot of gold! The value today would be $280 billion.
THE US GOLD IS IN CHINA
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The US is allegedly the biggest gold holder in the world with 8,000 tonnes. But as I wrote in a recent article, most of that gold is probably in China and in the rest of Asia as the US has disposed of or leased most of its gold. The US will of course never get back the sold gold and whatever they have leased is also gone forever. The Fed and most central banks lease gold to the market to earn a return. This gold used to stay in London or New York with the LBMA bullion banks. But today Silk Road countries, including Russia, buy all the gold they can get hold of. Thus the LBMA banks give the central banks an IOU and then sell the physical gold to the East. For the central banks, that gold is gone forever. The LBMA will never find sufficient gold to hand the gold back to them and thus that paper gold IOU is totally worthless. This means that the LBMA banks will fail as they can’t make good their physical gold commitments. And the central banks’ vaults will remain empty, leading to a collapse of the country’s currency and a surge in the gold price.
THE YAMASHITA GOLD
The 6,600 tonnes that Japan stole from China became part of the Yamashita gold. This was gold and treasures that Japan looted all over Asia from China, Korea, Indonesia and Malaysia.
The gold was hidden mainly in the Philippines and also in Japan. Yamashita was the Japanese general in charge of constructing massive and very intricate tunnels to hide the stolen gold and the other treasures. The looting and hiding of the gold involved massive atrocities committed by the Japanese army. Major parts of this gold has been found by the US and reportedly used for black operations all around the world.
CHINESE FIAT MONEY IN 740 BC
The Chinese people have learnt the hard way the importance of gold. China was the first country to introduce fiat money during the Tang Dynasty 740 BC. The value of the Chinese fiat money remained stable until the Yuan Dynasty in the 13th – 14th centuries. This was the first period of Chinese hyperinflation as they printed vast amounts of money to fund their wars.
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Later, in the 1930s and 40s, Chinese money lost its value totally as the Chiang Kai Shek rule was coming to an end. He was the President of Mainland China from 1928 to 1949. Chiang started in grand style. Already in 1929 loans made up 49% of the government revenue. The finances deteriorated further after the Japanese invasion in 1932. In the final years of Chiang’s rule, the Chinese economy was collapsing and money printing was rampant. One US dollar was worth Yuan 3.4 in 1937 and went to Yuan 23 million in 1949.
CHINESE GOLD LINE
The Chinese understanding of the importance of gold started during this hyperinflationary period as economic conditions deteriorated severely. The photographer Henri Cartier-Bresson captured, in the famous picture below, a proper Chinese gold run. In December 1948, as the currency became worthless, the Nationalist government decided to issue 40 grams of gold per person. As the photo shows, there was total panic to get hold of the life saving gold and many got crushed to death.
