Price Of Gold

[Martin]

Back in June, we were discussing on thaivisa.com whether gold was a good hedge when the baht seemed to be weakening, airlines were struggling to avoid horrendous losses, General Motors shares were being rated as "junk" etc etc.

I see gold has gone up 8% in the three months since then, and is being "tipped" to go up another 8% in the next three to fifteen months.

(From yahoo news today: " Many analysts are looking for gold to target $500 and above next year for the first time since 1987.")

[thaistick]

With a price/rent ratio over 400 to 1 in many markets when 100 to 1 is normal,the real estate bubbles in the US will be bursting big time.Millions of foreclosures and bankruptcies will shatter America's debt-ridden economy.Now is the time to short mortgage banks and home builders and go long gold and commodities.

Get out of dollars and into euros,Swiss francs,yuan,etc.When the dust settles,those with the cash will be able to buy up million dollar homes in the US for pennies on the dollar if one wanted to live in a looted-out third world banana republic.Fiat currencies come and go,but gold has endured through thousands of years of human history,so I have always been a goldbug who has been investing in the glitter for a couple decades.

My physical gold holdings are bullion coins like Canadian Maple Leafs,

Chinese Pandas,Aussie Kangaroos,etc.,in 1 ounce and fractional sizes.I stick with only the 99.99% pure gold coins so I avoid American Eagles which are 91%.

For the real investment gold,it's Perth Mint Certificates,which one can buy through Kitco.com, and gold mining stocks.The Perth Mint Certificates can be bought with $10,000 and up and is available in allocated or unallocated form and also in silver,platinum,etc.I am even more bullish on silver and think it will appreciate more percentage-wise than gold will.Plus with silver being so heavy,the certificates are the only practical way to buy and hold it.In the stock market,GLD and CEF are ETFs that operate like certificates as they have physical gold holdings instead of being mining companies.

My mining stocks are a couple large caps like Newmont and BHP and a mix of midcap and junior miners like DROOY and BGO.

Everbank is the main avenue for my large foreign currency investments.

I do have thousands in physical paper money in euros,Swiss francs,

Singdollars,yuan,etc., in my safety deposit boxes and they are equivalent to the gold coins but I use Everbank for the big currency investments.

When China revalued the yuan last month,my Singapore dollar account shot up $3000 in value in one day.Most Asian currencies are undervalued relative to the dollar and especially to the euro and Swiss franc,and China's and

Malaysia's depegging of their currencies will lift all of them up.

I have a New Zealand dollar 6 month CD which pays almost double the interest at 5.46% that local banks give.Plus since money flows to where it's treated best,currency appreciation can double or triple the true interest so one can actually achieve double digit gains.The Max Yield strategy is to buy CDs with the highest interest rates in the safe countries and let it roll over and compound and change to another country which gets higher interest rates.The strategy can turn $10,000 into $300,000 in less than 10 years.Now it's New Zealand and Australia which are good for high interest rates and where the money is going into.

[LivinLOS]

Thaistick we think very alike..

I have been bullish on gold for a long time but was stupid enough to miss out on the massive gains in the stocks I am in but only late (spring this year) and quite frankly have done extreemly well..

Crossed 460 on Fridays trade.. Multi year highs a long long way to go.. I can see >1000 ounce easily in a few years and if the 'perfect storm' of consumer and governement debt, high inflation, etc does tank the dollar and us economy the flight out of fiat money an into gold could make insane numbers..

If you read a little on the history of money EVERY fiat currency has been inflated to worthlessness over time.. Not one has made it.. Financial reckoning day is an interesting one and I found (listed in another thread) a superb website chronicalling the fall of the (IIRC) Ming dynasty due to thgier experiments with paper money.. The french revolution... Etc.. Really interesting but scary implications.

Consider what one dollar bought when the fed closed the gold window in 73... then compare what one ounce of gold bought in goods and sevices.. Then see what one dollor or one gold ounce buys now in goods and services.. Thsi inflation is basically a steath tax on savings brought on by printing more money (and fractional banking making many multiples of that available to the economy at large)..

I believe the coming decade will be a interesting one in financial and social terms.. could the dollar fail totally ?? Could the worlds reserve currency ank.. its not likely I think but its very much possible..

[Heng]

With a price/rent ratio over 400 to 1 in many markets when 100 to 1 is normal,the real estate bubbles in the US will be bursting big time.Millions of foreclosures and bankruptcies will shatter America's debt-ridden economy.Now is the time to short mortgage banks and home builders and go long gold and commodities.

Get out of dollars and into euros,Swiss francs,yuan,etc.When the dust settles,those with the cash will be able to buy up million dollar homes in the US for pennies on the dollar if one wanted to live in a looted-out third world banana republic.

Sweet deal. Million dollar homes for $10,000 a piece? Sign me up for about 2 dozen, thanks.

[goatfarmer]

,but gold has endured through thousands of years of human historyinto.

<{POST_SNAPBACK}>

We should live so long.

[britmaveric]

With a price/rent ratio over 400 to 1 in many markets when 100 to 1 is normal,the real estate bubbles in the US will be bursting big time.Millions of foreclosures and bankruptcies will shatter America's debt-ridden economy.Now is the time to short mortgage banks and home builders and go long gold and commodities.

Get out of dollars and into euros,Swiss francs,yuan,etc.When the dust settles,those with the cash will be able to buy up million dollar homes in the US for pennies on the dollar if one wanted to live in a looted-out third world banana republic.

Sweet deal. Million dollar homes for $10,000 a piece? Sign me up for about 2 dozen, thanks.

<{POST_SNAPBACK}>

Heng - buffalo will be flying before that happens!!

[Heng]

With a price/rent ratio over 400 to 1 in many markets when 100 to 1 is normal,the real estate bubbles in the US will be bursting big time.Millions of foreclosures and bankruptcies will shatter America's debt-ridden economy.Now is the time to short mortgage banks and home builders and go long gold and commodities.

Get out of dollars and into euros,Swiss francs,yuan,etc.When the dust settles,those with the cash will be able to buy up million dollar homes in the US for pennies on the dollar if one wanted to live in a looted-out third world banana republic.

Sweet deal. Million dollar homes for $10,000 a piece? Sign me up for about 2 dozen, thanks.

Heng - buffalo will be flying before that happens!!

Still, it's always amusing to listen to enthusiastic Michael Milken type pitches.

[LivinLOS]

Well if 'pennies on the dollar' means a 40% reduction in value coupled with high inflation (making that even worse) over a 5 year period I dont think thats impossible.. Not likely perhaps but possible in some regions..

[Martin]

If the dollar tanks we will all have bigger things on our minds than buying houses that are bigger than we need!

[LivinLOS]

Not if you have been betting on the dollar tanking..

And live in a gated armed compound

[Martin]

"live in a gated, armed compound"?---bluddy helll, no way.

I'd rather be back where I was born, in an end-of-a-terrace little house in a well-behind-nowhere mill village, if I had to leave this delightful wee Esarn township.

You are spot on (that armed lawlessness in huge quantities is something that will come if the dollar tanks).

But, surely, it won't come to that?

Surely the Americans will come to their senses and find some people who will run their Government in the sensible way, and yield gracefully to China taking over as the main actor on the world stage.

Won't they?.

[LivinLOS]

Its too late.. What people dont seem to realize is this foriegn financed Gov deficit and trade deficit means China already owns America..

Deficits dont matter.. Yeah right..

[ArtfulD]

My affairs are tied up very much like Thaisticks, although by sounds of it not quite as diverse. Other than agreeing very much with both what Thaistick and LivinLOS have articulated not much more to add but Hold Onto Your Hats! Its sure to be a bumpy ride.

[simcity]

If you read a little on the history of money EVERY fiat currency has been inflated to worthlessness over time

I have see few time this FIAT currency , what is the meaning ?

FIAT currency = ? ( something to do with a lot of nothing ? like the dong )

[britmaveric]

If you are wagering on China thats a disaster coming.....might as well backed the russian ruple in the 80(s).

[Martin]

For simcity: fiat money is paper money that is not backed up by gold.

So US$, GBP, bahts etc are all fiat money. They are legal tender because a Government says they are.

There used to be convertible money---for instance the US$ and the GBP, when the USA and the United Kingdom of Great Britain were on the gold standard. That meant that those Governments guaranteed they would give you a stated quantity of gold in return for you giving them back their piece of paper (dollar bill or pound note).

But they 'came off the gold standard' quite a long time ago.

So they can now print more money without getting and storing away the equivalent amount of gold.

This is basically dodgy, unless the government issuing the money can be trusted not to yield to the temptation to print a load more money when it needs some (like for paying the pensions that it has promised).

Fortunately, for the past fifty years, goverments have behaved reasonably responsibly, because they remember what happened when the German government printed loads of extra money in the 1930s. (Rampant inflation).

Things in UK were getting quite unstable when inflation got over 10% from around 1970 to around 1980. A lot of older folk saw the value of their savings halve (i.e. what their savings would buy in 1980 was only half what they could have bought in 1970).

The reason we are discussing holding some of our savings in gold is that gold 'holds its value'.

(Suppose you have US$1000 saved and it will buy you 1000 loaves of bread today. It will only buy you 100 loaves in ten years time if we get about 30% inflation throughout that time.

But if you buy 2 ounces of gold today---which would cost you US$930---you can expect that that gold will still buy you 930 loaves of bread in 2015, despite the inflation.)

On the other hand, if there is no inflation, your US$1000 would have 'grown' by the Bank Interest if you had kept it in cash in the bank. Say 2% was paid. You would have approximately US$1200 and could buy 1200 loaves of bread in 2015.

So we say "Buying gold hedges us against inflation (meaning gold 'insulates' us from the effect of inflation), but it does so at the disadvantage that we forego getting interest".

[KhunPadThai]

If you read a little on the history of money EVERY fiat currency has been inflated to worthlessness over time

I have see few time this FIAT currency , what is the meaning ?

Fiat currency is currency that is not backed by gold or silver. The word fiat is Latin meaning "let it be", because the government simply creates it by edict, out of nothing, and is therefore not limited in the amount that it can create, unlike precious metals.

The goldbugs like to point out that unbacked currency coincides with periods of inflation, while during periods of metals backed currency inflation is low. This is true for some periods, such as the late 19th century, but I haven't examined the economic history thoroughly enough to see if it is generally true.

What the goldbugs miss is that the current period of fiat currency also coincides with a dramatic increase in the standard of living. Also, adherence to a gold standard results in serious economic depressions such as the 30's. Studies have shown that the depth of the 30's depression was greatest for those countries that clung to the gold standard and less for those that left it early. The goldbugs seem to take the health of the currency as the sole criterion of economic well-being.

Countries would typically go off the gold standard during wars in order to print money to pay for erupting military costs. This was true in WWI and again in America's conduct of the Viet Nam war, when Nixon "closed the gold window" that had enabled dollars to be converted to gold. The end of gold convertibility meant that large trade imbalances could, and did, arise because they could be paid for with debt obligations, rather than settled in gold. The present global trade imbalance is the source of bubbles like the current housing bubble, which can therefore be said to be a long-term effect of the Viet Nam war.

May be more than you wanted to know.

Khun Pad Thai

[samran]

But they 'came off the gold standard' quite a long time ago.

So they can now print more money without getting and storing away the equivalent amount of gold.

This is basically dodgy, unless the government issuing the money can be trusted not to yield to the temptation to print a load more money when it needs some (like for paying the pensions that it has promised).

<{POST_SNAPBACK}>

Put simply, the benefits of removing a currency from a gold standard far outweigh the costs. Floating a currency, and letting its value reflect that of the economy at large (rather than gold) puts the onus on government to ensure that its policy settings are designed to produce an efficient and productive economy.

Sticking to a gold standard is the monetary policy equivalent of stuffing money under the bed. A fine concept, but not a good one if the house around it is falling down.

On a related topic, see the story below, a reminder of quainter times:

From ‘The Age’, Melbourne.

The Reserve Bank of Australia is dispersing a collection of gold and other coins valued at as much as $19 million, saying it no longer needs them.

The bank says the coins were accumulated before 1976 when Australian law required that members of the public exchange gold coins for currency. Many poorer quality gold coins are being melted and sold as bullion.

The RBA will retain a few coins for display in its museum, with others of historical value being transferred to the collection of the Royal Australian Mint in Canberra.

The remainder, nearly 6000 gold coins and 800 silver and copper coins dating from 1817 that may interest collectors, will be auctioned in Melbourne on November 29 and 30.

The sale will be conducted by Downies Australian Coin Auctions. Managing director Ken Downie said yesterday he believed the auction would set the standard for coin auctions.

"Some of the coins are the finest that have ever been offered at a public auction and they will fetch some tremendous prices. There will be some hot activity."

Reserve Bank assistant governor of business services Bob Rankin said: "The coins … were no longer fulfilling any role for us."

Mr Downie said he believed the bank had made the right decision.

Estimated prices range from $85 to $55,000 for rare sovereigns minted in 1852 and known as Adelaide pounds.

[Martin]

Sticking to a gold standard is the monetary policy equivalent of stuffing money under the bed. A fine concept, but not a good one if the house around it is falling down.

<{POST_SNAPBACK}>

I have always viewed having one's savings in gold as being equivalent to keeping one's money in one's pocket, so it will still be in one's possession if the (governments' control of inflation) house falls down. At the disadvantage that one's money is not earning any interest whilst it is safely in one's pocket and not lent out to some bank(ster).

(By the way, '(countries) sticking to a gold standard' is not the topic of the thread. We are discussing whether to have some of our savings in gold, since we are living in countries that are no longer on a Gold Standard.)

[ArtfulD]

"Put simply, the benefits of removing a currency from a gold standard far outweigh the costs. Floating a currency, and letting its value reflect that of the economy at large (rather than gold) puts the onus on government to ensure that its policy settings are designed to produce an efficient and productive economy."

And quite simply governments cant be trusted to do this. Floated currencies is what is enabling countries to keep their currencie artificially low to promote growth etc like China. The USA is now having to remove certain goods from its inflation index to make gullible people think inflation is not soaring there and pretending their close to deflation. The only things that have gone down are provided by the likes of China due to Chinas shady currencie dealings. Which in turn have funded huge spending by the US government, citizens (and the likes of Europe too) and kept all the ticking time bombs ticking away until finally all confidence will be lost and a domino effect will be triggered.

Bankrupcies are at all time highs, saving rates at all time lows (America actually has a ZERO savings rate for first time ever http://moneycentral.msn.com/content/invest/extra/P124952.asp )....people are getting credit out for amounts they can not afford to pay back unless inflation keeps soaring...e.g. house prices....hardly anyone buys a house with cash...its all debt and they are hoping price inflation will inflate so much to cover their debts and make more money...at some point it has to stop as average price charts show the parabolic movement in house prices that can simply not be sustained in relation to peoples incomes. http://www.firsttimebuyerhelp.co.uk/images/youarehere.gif

The increased standard of living has been provided by debts and at some point all debts must be paid unless confidence is completely removed from the system and you have a problem ala Brazil, Argentina, THAILAND on your hands. Which is nothing compared to power houses such as USA, China etc.

Where does gold fit in all this? Debts can not get so impossibly out of control if you have to have your currency backed by gold. Ditching the gold standard might have provided a launching board for standard of living (which is a debateable cause/effect) but it can also be the crushing blow when that standard of living delines in future years due to the fiscal glutony of the masses that can no longer be sustained.

Edit: On having gold as part of your portfolio...with the anticipation of financial crisis, hyper inflation to try and remove public and government debts then you need something that will hold its value rather than letting your paper money go up in smoke (people saving money get punished for those spending what they dont have). Gold has been the standard for 1000s of years, and gold is accepted everywhere in the world which makes it a good vehicle for the ride.

Edited September 22, 2005 by ArtfulD

[chownah]

Off topic...I've seen the term 'banana republic' used twice on TV recently and I'm pretty sure incorrectly both times. Venezuela, Brazil, Argentina, and Thailand are all not banana republics. The term 'banana republic' (if I'm correct) originally refered to some of the countries in central america where the gov't's were controlled by the American Fruit Company (and perhaps other US companies...my history isn't so good) back in the mid and early 20th century.

From Google:

Definitions of banana republic on the Web:

a small country (especially in Central America) that is politically unstable and whose economy is dominated by foreign companies and depends on one export (such as bananas)

wordnet.princeton.edu/perl/webwn

Banana Republic is a chain of "casual luxury" clothing stores owned by Gap Inc., which also operates Gap and Old Navy stores. Founded in 1969, Gap is a mid-scale specialty retailer, while Old Navy was launched in 1994 as a value chain.

en.wikipedia.org/wiki/Banana_Republic

Banana republic (or Bananaland) is a pejorative term for describing a country with a non-democratic or unstable government, especially where there is widespread political corruption and strong foreign influence. It is most often applied to small countries in Central America or the Caribbean.

en.wikipedia.org/wiki/Banana_republic

[jrincon17]

With a price/rent ratio over 400 to 1 in many markets when 100 to 1 is normal,the real estate bubbles in the US will be bursting big time.Millions of foreclosures and bankruptcies will shatter America's debt-ridden economy.Now is the time to short mortgage banks and home builders and go long gold and commodities.

Get out of dollars and into euros,Swiss francs,yuan,etc.When the dust settles,those with the cash will be able to buy up million dollar homes in the US for pennies on the dollar if one wanted to live in a looted-out third world banana republic.Fiat currencies come and go,but gold has endured through thousands of years of human history,so I have always been a goldbug who has been investing in the glitter for a couple decades.

My physical gold holdings are bullion coins like Canadian Maple Leafs,

Chinese Pandas,Aussie Kangaroos,etc.,in 1 ounce and fractional sizes.I stick with only the 99.99% pure gold coins so I avoid American Eagles which are 91%.

For the real investment gold,it's Perth Mint Certificates,which one can buy through Kitco.com, and gold mining stocks.The Perth Mint Certificates can be bought with $10,000 and up and is available in allocated or unallocated form and also in silver,platinum,etc.I am even more bullish on silver and think it will appreciate more percentage-wise than gold will.Plus with silver being so heavy,the certificates are the only practical way to buy and hold it.In the stock market,GLD and CEF are ETFs that operate like certificates as they have physical gold holdings instead of being mining companies.

My mining stocks are a couple large caps like Newmont and BHP and a mix of midcap and junior miners like DROOY and BGO.

Everbank is the main avenue for my large foreign currency investments.

I do have thousands in physical paper money in euros,Swiss francs,

Singdollars,yuan,etc., in my safety deposit boxes and they are equivalent to the gold coins but I use Everbank for the big currency investments.

When China revalued the yuan last month,my Singapore dollar account shot up $3000 in value in one day.Most Asian currencies are undervalued relative to the dollar and especially to the euro and Swiss franc,and China's and

Malaysia's depegging of their currencies will lift all of them up.

I have a New Zealand dollar 6 month CD which pays almost double the interest at 5.46% that local banks give.Plus since money flows to where it's treated best,currency appreciation can double or triple the true interest so one can actually achieve double digit gains.The Max Yield strategy is to buy CDs with the highest interest rates in the safe countries and let it roll over and compound and change to another country which gets higher interest rates.The strategy can turn $10,000 into $300,000 in less than 10 years.Now it's New Zealand and Australia which are good for high interest rates and where the money is going into.

<{POST_SNAPBACK}>

The world will be in be in big trouble if this happens and i don think that they will let it . Means alot of nothing for the rest of the world .

[ArtfulD]

Off topic...I've seen the term 'banana republic' used twice on TV recently and I'm pretty sure incorrectly both times.

Indeed i had realised I used it wrongly and make changes before you posted.

[samran]

Artful D, Martin - I see your point regarding holding gold in your portfolio, if thats your thing.

In terms of Thai stick's post, following the higher interest rate for government bonds doesn't work. Macro economics 101: Purchasing Pricing Parity, inflation and all that. Interest rate differentials between currencies are taken into account into the exchange rate. Otherwise you'd literally be able to print money for yourself and we wouldn't need productive investments. Of course if you were moving your money out of a bog standard 0.02%savings account to something reflecting any government bond, of course you are going to do well.

As for Monetary Policy and the old gold standard. Remeber, a fixed exchange rate and tying the value of your currency to gold are one in the same. People forget that in the 70's one of the main transmission mechanisms for stagflation across the world was the rigidity of the exchange rate movements. Those countries which held on to some sort of fixed exhange rate - where gold was the basis of this, held hostage with very little control over their internal macro economic settings (ie over inflation). Additionally, governments end up betting against the investment community as to the rate of exchange - surely not the best thing for a government to do. Better to let the markets bet against themselves.

Any time that there has been some sort of fixed exchange rate mechanism, it inevitably comes under attack - the EMU, the Asian contaigen. I guarantee you as well, once they find a way, hedge funds will bet like mad to try and break the Yuan. Confidence (or the lack of it) in an economy has nothing to do with if a currency is tied to something, gold or otherwise.

I tend to think you can less trust a government who wants to tie the currency. There is even less transparency in the system, and you have the potential to get burnt more.

[Martin]

In reply to britmaveric about ten postings earlier:

I didn't say that I was thinking that China's yuan was good currency. My point is that China is likely (probably/ virtually certainly in my opinion) to become 'the main actor on the world stage', simply because it has the biggest population and more and more of its population are getting more material wealth. Maybe I am a bit simplistic, but I have always felt that national 'clout' was very much a reflection of (number of poulation) multiplied by (average personal wealth).

However, I do not equate material wealth to moral leadership. Main actors are the biggest villains in some stage productions (vide the tragedy 'Macbeth'). It is the words 'tragedy' and 'abdication of moral leadership' that come to my mind to my mind when I read news like that which I quote below. (And I am not off topic---control of inflation etc are, at bottom, matters of governmental morality.)

"While the post-Katrina Gulf represents a paradise for contractors, it is a nightmare for ordinary workers who lack the protections of prevailing wage laws that have existed since the Great Depression. In the Gulf, prevailing wages under the Davis-Bacon Act will never make people rich: A laborer in New Orleans would receive $10.40 per hour in wages and fringe benefits. But the Bush administration’s suspension of the Davis-Bacon Act can and will drive down wages beyond government contracts and perpetuate the poverty so vivid on our television screens in the last two weeks. By suspending the act, contractors will be able to effectively set low wages since they will be a large percentage of the employers in the region. An administration that has thus far failed to veto a single spending bill bloated with earmarks, or to cut a single dime from tax cuts directed at multimillionaires, now proposes to squeeze out a few more pennies by cutting wages for people who today have nothing. This may be consistent with four years of budgeting. It is still wrong.

Ordinary people don’t only lose on contracts. Today, price gouging is occurring both at the gas pump, where charges have reached $7 a gallon —and at the check-casher, where victims without bank accounts can be required to fork over up to 10 percent of their relief checks. To date the administration has done precious little to stop this profiteering.

While the post-Katrina Gulf represents a paradise for contractors, it is a nightmare for ordinary workers who lack the protections of prevailing wage laws that have existed since the Great Depression. In the Gulf, prevailing wages under the Davis-Bacon Act will never make people rich: A laborer in New Orleans would receive $10.40 per hour in wages and fringe benefits. But the Bush administration’s suspension of the Davis-Bacon Act can and will drive down wages beyond government contracts and perpetuate the poverty so vivid on our television screens in the last two weeks. By suspending the act, contractors will be able to effectively set low wages since they will be a large percentage of the employers in the region. An administration that has thus far failed to veto a single spending bill bloated with earmarks, or to cut a single dime from tax cuts directed at multimillionaires, now proposes to squeeze out a few more pennies by cutting wages for people who today have nothing. This may be consistent with four years of budgeting. It is still wrong."

America could still have pride, even as a lesser actor, if it kept its moral act together----but it is worrying to see that it isn't doing so.

[Martin]

Following up ArtfulD's point about punishing those who save for the sin of those who borrow, I remember an observation that was made in the UK, when it was struggling with inflation at levels that people had previously had no experience of:

"Inflation is a device whereby the young rob the old of their savings".

[thaistick]

"When written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger, and the other represents opportunity."

John F. Kennedy

ENY and OMNI waaaaaay up today!

OMNI is an oil and gas equipment & services company went up 37.84% today and ENY is an oil and gas drilling & exploration company went up 40.10% today.

Made a small fortune and sold them but will rebuy on dips.

Just came back from a fantastic week in Paris and today's profits will pay for my week in Rome in October.

I love the markets!

Also I would do what one of my investment gurus Adventure Capitalist Jim Rogers is doing and go long gold and commodities and have a Swiss bank account for one's daughter and a Chinese nanny to only speak Mandarin to her.This will be the Chinese century and speaking Chinese will bring huge economic rewards.China has 5 times more science and engineering grads than America which has become a public school educated functionally illiterate society which can't find the Pacific ocean or Canada on a map.China will be a thousand Hong Kongs or Singapores in one in a few years.

[britmaveric]

Martin - yes China has more people than any other, but the large majority are poor. Huge population also results in a vast drain of natural resources. These two facts alone will be there undoing and a w/vast amount of their GNP being spent on military. China is heading down the same course as Russia in my eyes - problem is that don't realize it yet.

If China is going to be a competitor - they need to let the Yuan float and of course buy into full capitalism. To be honest I don't think it will happen.

[Martin]

To thaistick: IMO you are spot on with your observation of many, many "Hong Kongs and Singapores" to come. In fact, there are a few already well on a'building and producing in Southern China already.

To britmaveric: I like your pseudonym---in fact, it would have suited me before I worked in Singapore. (I carry a UK passport and my antecedents were Scots--so I am British and a Briton--and I pride myself that I have a carefully-nurtured streak of the maverick in me, as I don't want to live my days with anyone's brand burned on my rump.)

However, "GlobalNomadMaverick" would be more appropriate for me now.

How much parallel there may be between what comes for China and what has come to Russia remains to be seen.

I notice that UK, France and Germany (and arguably America) have come from a situation where the majority of their people were poor. So I'll wait and see (I hope) what happens in China over the next few years.

What six years of working in Singapore did for me was to open my eyes to some differences between East and West. Those whose thinking comes from a background of Confucianism etc have competences that differ quite a bit from those of us who, by nature and nurture, think on the Judo-Christian lines. China buying into the ideas of Western capitalism totally wouldn't be a good thing for China, or for the rest of the world. But the idea doesn't worry me, because I can see it won't happen.

[britmaveric]

Martin - the success of europe, america, Hong Kong (former brit colony) and even Singapore is based on capitalism. So until that rule is broken I think its wise to follow the trend.