Will China Ban Gold?

Beijing-China (Dec 3)  Summary: •The dollar is simply too attractive for investors to consider gold or gold-based ETFs right now.

•The Chinese government may take actions to restrict the gold market. If China's currency situation worsens, the government may take drastic steps.

•A Chinese ban on gold would severely hurt the market.

Gold's strength as an investment depends on what currency you buy it with and what your objectives are.

For someone who lived in the Weimar Republic, gold would be a pretty safe bet. The metal can still benefit investors in places like Venezuela, Russia, and even the United Kingdom because of the inflation and currency weakness in these nations.

However, for Americans privileged to hold the mighty dollar, there seems to be little reason to invest in the yellow metal at this point. American currency will be a better store of value for the foreseeable future.

Several governments have adopted policies specifically aimed at crushing domestic physical gold demand in their borders. If you live in one of these countries, stock up on gold before it's too late. However, if you don't, avoid the metal.

Dollar-denominated gold ETFs like the SPDR Gold Trust (NYSEARCA:GLD) should be wholesale avoided because they track the metal in a currency it underperforms in.

Is China Declaring War on Gold?

For many people the term "made in China" has almost become synonymous with cheap and low quality. This sentiment extends to the hard-asset investment opportunities in the country.

China is one of the "fakest" major economies on earth. By this, I mean GDP numbers are untrustworthy; the housing market is artificially propped up; the stock market is propped up, and the nation has a lack of reliable hard assets, except for gold and foreign currency.

Source: SeekingAlpha