The US is becoming less and less attractive as a destination for foreign direct investments (FDI). Either that, or China is just becoming that much more attractive. I guess we can attribute China's taking over as top drawer of FDIs for the first half of 2012, both to China growth, and US shrinkage (if such a term is appropriate here).
The USA has been riding on the economic development and capital accumulation of past centuries, but much of its productivity we observe now is credit-fueled, not a recipe for sustainability. We can argue the same thing about China, in fact, but China is in a relatively earlier stage in the boom-bust cycle. For all intents and purposes, the US economy is doomed.
What are the implications with regards to the gold market? China's emergence is a game changer of sorts, and increased FDIs is one of several indicators pointing to China becoming the number-one economy within most of our lifetimes. What's game-changing with regards to gold is the fact that China is acting so bullish, buying thousands of tons from Hong Kong, and increasing its gold imports by the year. Notwithstanding continued bubble-like policies, this is as close to a gold standard as we have gotten in a century. Such prominence of gold will be seen in increasingly higher prices, regardless of what currency is used for measurement.
This is just one more reason to buy gold. In Singapore, I believe you can get gold for smaller premiums than compared to Hong Kong. When buying in the latter, you're competing in bids against a rising economic superpower representing roughly a third of humanity. Singapore's market, I believe, is relatively small compared to what lays in store for it in the future.
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