10 new Chinese cars headed to Beijing Motor Show
Editor's Note This is a guest commentary from one of WND sponsors, Kevin DeMeritt, president of Lear Financial If you want to learn more about investing in precious metals, take advantage of the free information Lear Financial provides for WND readers.
Imagine January 29 billion people walking or cycling to straddle the work now imagine driving.
That's where China is heading towards an explosive growth of the country nearly 10 percent in the last quarter of 2003 alone is raising expectations of his people once unpretentious.
Take auto, examples last year, increasing 55 percent in passenger cars sold in major cities of China is just a sign of things to come A corresponding increase is expected this year, as well.
Automakers, as you can imagine, realize China was responsible for almost all the growth in global sales of Volkswagen in 2003, while GM sold 70 percent more cars in China in the first quarter of 2004 there is a year These are statistics that other automakers drool.
If you look in the world in terms of profitability, growth in China is head and shoulders above everyone else, said Michael Dunne, president of Automotive Resources Asia.
But while he could absolutely thrill Detroit, this Chinese pent-up demand for cars only is global energy planners Jumpy.
With auto sales booming, the result is that Chinese oil consumption is also on the launch pad And that's just one of the many oil demands of the explosive Chinese economy.
Statistics confirm China, once a major oil exporter in its own right, is now a net importer fastest growing crude oil and the second largest consumer of oil behind the US Surprisingly the world, this thirst for oil is expected to go from 5 to 5 million barrels per day to 8 million barrels per day within les six years.
Coincidentally, 8 million barrels per day is almost all of the daily production of Saudi Arabia.
The great nations of Asia, primarily giants China and India, are growing rapidly and need to significantly increase their energy consumption to build their infrastructure and bring them closer lifestyle Western standards and since much of the world has been explored for crude oil, it is not enough new oil to supply coming online in both the industrialized West and is industrialized, writes Adam Hamilton analyst.
It's like the words of the old song, how you will keep them on the farm now that they've seen Paris Pairée applied here how China can go back from the sophistication point it has now reached it can t China won does not consume less oil than it is today no longer consume, given the limited supply of oil in the world and, some think, decreasing supply of oil, the stage is being a test of severe energy force.
Barring the famous discovery of free energy source, oil has no place to go but up and that is just focusing on the energy appetites of Asian countries this is not taken into account the precarious state of petroleum producers Saudi and the Middle East in general.
A major crisis could be much closer than many people believe can Saudi Arabia is in a perilous state in terms of political stability, and the price of oil, which has risen steadily for a long time, is in peak position and I Don t mean 10 He could go to, say, 80, maybe 100, in the event of a massive terrorist attack Arabia Historically, gold and oil have tended to move in tandem, and a crisis of proportions I speak could cause gold spike too, for, say, 500 600, maybe more, writes analyst Clive Maund German.
He died on the oil and gold have historically evolved in parallel In fact, analysts have long recognized the golden ratio Oil Since 1965, this ratio was 15 April Today, however, it is output line 11 1 Now's the best it's been in a while.
At 36 a barrel, gold must be historically 40 554, depending on the report instead of 401, it is to this day.
Anyway you want to slice it, in light of the historical relationship of gold to oil, gold is gold so undervalued significantly behind the oil bull and almost certainly catch up sooner or later here to bring that touch of gold compared to the return oil line, Hamilton wrote.
This means that the dynamic is in place for a paradigm shift in how we perceive our once abundant oil supplies and our stocks once gold at low cost time, these factors certainly play the only real question is whether or not we will be ready.
Consider the observation of Sol Palha tactical newsletter investors.
What you will notice is that the oil has risen in all currencies and is therefore in a real bull market Again, we think this is a precursor of what is in store for the precious metals sector to future those who are not on board will miss the trip of a lifetime.
None of this takes into account, of course, many other factors bullish on gold for example.
The rising interest rates are bullish for gold in the 70 because inflation was launched and the Fed rate setting record have been unable to have a moderating effect So gold has reacted by jumping a record 2,261 percent with higher quarter point interest rate the Fed, the same scenario could be kick off today.
In May, consumer prices rose by 0 6 percent which is equivalent to 7 2 percent annualized inflation According to an article on the MSNBC Web site, groceries are quietly a full 10 percent there a year ago What is more, if the Chinese value re their currency as they will be suspected in October, it will only add to these serious inflationary pressures to repeat, it was out of control, inflation Fed to the test in the 70s that kick gold run record.
Former Treasury Secretary Robert Rubin, and former president of the New York Fed, Gerald Corrigan, have both warned that the US could be heading straight into a serious crisis worse than what we have seen in 1987, due to the current account, budget and trade deficits These deficits could more than offset the effect stronger dollar usually higher interest rates Needless to say, in such a crisis, investors flock to the only evidence left active debt, precious metals.
Small wonder analysts like John Reade of UBS Bank have always pegged to gold 455 ounce or more by year-end that does not mean that we should adopt a panicked sky is falling mentality and let fear drive us to gold rather objective observation, cold logic and historical precedent should be enough to propel most any investor to think about a gold diversification.
And if that was not enough, just think these Chinese 1,296,077,196 upwardly mobile.
With over 20 years of industry experience, Kevin DeMeritt is president of Lear Financial, one of the precious metals today the fastest growing and most successful investment firms.
Chinese New car, Chinese President DeMeritt Lear, Lear Chairman DeMeritt Financial.