According to a just released Wikileaks Chinese embassy cable, the US and Europe "have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the US dollar or Euro."
Something tells us that gold may not stay below $2,000 much longer as this cable circulates throughout the hedge fund community when they return from The Hampton's on Tuesday.
3. CHINA'S GOLD RESERVES
"China increases its gold reserves in order to kill two birds with
The China Radio International sponsored newspaper World News Journal
(Shijie Xinwenbao)(04/28): "According to China's National Foreign
Exchanges Administration China 's gold reserves have recently
increased. Currently, the majority of its gold reserves have been
located in the U.S. and European countries. The U.S. and Europe have
always suppressed the rising price of gold. They intend to weaken
gold's function as an international reserve currency. They don't
want to see other countries turning to gold reserves instead of the
U.S. dollar or Euro. Therefore, suppressing the price of gold is
very beneficial for the U.S. in maintaining the U.S. dollar's role
as the international reserve currency. China's increased gold
reserves will thus act as a model and lead other countries towards
reserving more gold. Large gold reserves are also beneficial inpromoting the internationalization of the RMB."
Click here for the full cable: