It was an embarrassing defeat for the US as it failed to keep its major allies from seeking membership in the China-sponsored Asian Infrastructure Investment Bank (AIIB), which will provide Asian countries an alternative to the US-dominated IMF, World Bank and Asian Development Bank.
Allies seeking membership include the UK, Australia, Germany, France and South Korea; a total of 47 applications were received by the Tuesday deadline. Even Taiwan, which China considers a renegade state, seeks membership. Japan was the only major US ally that did not apply.
That so many US allies eagerly seek membership in AIIB serves to prove that US influence in Asia is dwindling despite Obama’s “pivot to Asia.” The eager acceptance of AIIB is not the only proof that world power is moving east.
Charles Goyette, author of the best-selling book The Dollar Meltdown, has noted that power follows gold. Or, is it the other way around: gold follows the power.
Since January 1, withdrawals from the Shanghai Gold Exchange have exceeded 315 tons, which is in excess the 300 tons of newly-mined gold around the globe during the same period. And, this has been a regularly occurring event, Shanghai withdrawals exceeding newly mined gold.
However, it should not be overlooked that reclaimed gold makes up one-third of gold supplies. So, while China currently is importing more gold than is mined, it does not import more than all gold entering the market annually. But, let’s not forget India.
India and China in recent years have been swapping places as the world’s largest importer of gold. While China won out in 2012 and 2013, India inched ahead in 2014. Undoubtedly, China and India together annually import more than the world’s annual supply.
Demographics suggest that China will become the world’s dominant gold importer. Per capita ownership of gold in China is low compared to neighboring Asian countries, and China’s middle class is projected to grow from 300 million to 500 million in only the next five years. Additionally, China in recent years has liberalized its gold and silver markets to encourage individual purchases.
China is becoming the feared Dragon that Chinaphobes have been warning about since Nixon’s and Kissinger’s Ping Pong Diplomacy of the 1970s. What the Chinaphobes didn’t foresee was that the Dragon would eat the West’s gold.