America’s Next Great War

It Will Look Different Than You Imagine

Somewhere out near Hong Kong Airport, tons of gold are buried underground. This is not, however, the story of a long-forgotten treasure.

It’s the story of a weapon of mass destruction.

And it very well could play a defining role in America’s next great war.

That’s a problem.

No doubt you’ve heard somewhere along the way that America is the richest country in the world and yada, yada, yada. But that’s not necessarily as true as we might hope it to be.

The reality is that America is the world’s largest debtor nation, which means in the war to come, we’re not the dominant but the submissive.

See, whatever lucre once lined Uncle Sam’s national treasure chest has been replaced with an inordinate supply of IOUs. Moreover, all the gold supposedly held in Fort Knox—in theory, 8,000 tons or so—might be smoke and mirrors. The Federal Reserve (which is not federal, by the way, but privately owned) has not allowed U.S. government overseers to audit the gold since at least the 1950s.

So just how much national treasure can Uncle Sam really pull together in a wartime crisis?

The more difficult question, though, is what happens when wealth becomes the weapon rather than bombs and bullets?

In China, the country America is most likely to face off against, the treasure chest is stacked with trillions of dollars of currency reserves, not debt. Indeed, for every $1 of reserves China owns, Uncle Sam has $10 in debt.

As well, China’s treasure chest is packed with what is quite likely the world’s largest horde of gold—by my estimate, more than 13,000 tons, more than 1.5x America’s holdings, assuming the Fed isn’t full of B.S. (and I’d bet B.S. is all that Fort Knox holds).

Officially, China’s gold holdings are far smaller—just 2,000 tons, by World Gold Council measurements. But as I’ve noted in the past, China is the world’s largest gold miner, and by law gold is not allowed to leave the country.

Moreover, China is the world’s largest gold buyer, and a lot of that is trackable through statistical agencies in Hong Kong that eagle-eye the comings and goings of every import and export.

I’ve researched those numbers—the mining and the buying—and it’s obvious that China’s gold is multiples of the official readings.

As added proof, Bloomberg noted back in 2011 that China was building a vault near the Hong Kong airport to accommodate “an unending river of gold that is flowing from the west into China” … while the Financial Times in 2016 reported that China bought one of Europe’s largest and most-secure gold vaults in London that is dubbed the “mini Fort Knox.”

I mean, if all you have is 2,000 tons, why do you need your own Fort Knox in London and a vault near a major global airport to handle all the gold arriving en masse?

What does any of this mean for a war, you might be thinking?

Well, every week, dear old Uncle Indebtedness sells governmental bonds to fund his spending addiction. China is one of his biggest buyers, trailing only Japan.

Right now, China owns nearly $1 trillion worth of American debt.

That is a financial nuclear weapon.

If China stopped buying Uncle Sam’s paper and dumped all the American debt it owns, U.S. Treasury bonds would plunge in value and interest rates would soar to such a degree that the government would spin into a financial and monetary crisis the likes of which America has never experienced.

Higher interest rates would push the cost of repaying America’s existing debt to such levels that the government would have to sell more and more and more debt just to cover the cost of the escalating interest payments… basically “negative financing,” which ultimately leads to printing extreme sums of money and hyperinflation.

And without China in there gobbling up a lot of debt, global buyers would struggle to absorb all the paper Uncle Impoverished needed to sell, creating even more problems and more need to simply print trillions of dollars out of sheer necessity.

The skeptics will always chime in with, “Never happen! China would be hurting itself more because of the plunging value of its dollar reserves, and the impact of losing sales to American consumers.”

Good point.

Wrong point of view.

We go back to that horde of gold buried near Hong Kong Airport, and mini Fort Knox in London.

Gold rises as the dollar sinks. That’s how currencies work. And at the end of the day, gold is a currency.

If China does have more than 13,000 tons—and the domestic mining and import data is there for anyone to assess—then today’s value of China’s gold is approaching $800 billion… an almost 1:1 offset for the U.S. debt China owns.

If the dollar plunges, China’s gold rises to more than offset the losses. A perfect dollar hedge.

As for China’s economy getting hit by the lack of U.S. consumer buying… true. But China since at least 2009 has been urging its citizens to gobble up gold, a massive policy change in a country that once forbid private ownership of gold.

That’s not a headscratcher.

China is prepping its population for something big.

Like I said, America’s next great war could look very different from all its previous wars.

China has the power to literally ransack the U.S. economy without firing a single bullet.

As Confucius never said: Poor people plan for Friday night; rich people plan for three generations.

In this case, I’d be following the rich people and snapping up gold every chance you get.