"Who's got the debt? The West. Who are the biggest creditors? The East."
Europe will be forced to sell its
gold reserves to cover its debts and a resurgent China is poised to snap them up, according to Close Brothers' Chris Bailey.
The Chinese government is likely to start buying up
gold soon, according to Bailey, and the giant economy's debt-free position means a recovery for Chinese equities is inevitable.
He thinks that history has shown
gold reserves equate to a strong economic position, and this combined with China's balanced books make it the best place for investors' money.
"Investors should follow the
gold. Who has the
gold has the power," he said.
He added: "Current cash-strapped European and Western governments still have a lot of
gold. Therefore I can see there being, effectively, a bailout to sort out their debt with China doing a big purchase of
gold off them; and we are already seeing this happen. ...
"All this funny money or quantitative easing is good news for emerging markets, where the consumer continues to be so important. In very simple terminology, who's got the debt? The West. Who are the biggest creditors? The East."
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