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One of the most significant things the average American can learn from the Chinese is the vital importance of gold coin investments.

February 14, 2011 – One of the most significant things the average American can learn from the Chinese is the vital importance of gold coin investments.

The Chinese people are becoming increasingly vocal about their government’s heavy investment in dollar securities, which constitute the bulk of China’s $2.85 trillion in reserves according to the Wall Street Journal. Of particular concern are hundreds of billions of dollars tied to Fannie Mae and Freddie Mac, and Obama’s assurances that those debts will be honored have been of little comfort.

"For the U.S. Congress to give a clear guarantee on this issue is almost impossible," senior economist Lu Zhengwei said last week. That, along with a report in the Chinese International Finance News that losses on China’s Fannie and Freddie holdings could reach $450 billion, caused the government to strongly deny that any money has been lost on its dollar assets.

The Chinese government’s recent actions encouraging stronger gold investments, including those in foreign held gold, lends credence to their denial. They know that the dollar is going to continue dropping sharply against gold and consequently any losses in dollar assets can be greatly diminished by conversion to gold.

We Americans are deeply in hock thanks to Fannie Mae and Freddie Mac. “Loans bought or guaranteed by Fannie, Freddie and other state entities accounted for 92% of all mortgage loans made in September, according to the latest data from research firm LPS Applied Analytics,” says the Wall Street Journal. “Government ownership means taxpayers stand to lose tens of billions of dollars if the firms get into trouble again.”

We can’t just cut and run because that “could cripple an already weak housing market,” but the longer market reform takes “the more opportunity the beneficiaries of the status quo will have to stop it.”

Like the Chinese, we would be well advised to hedge against loss with gold coin investments.

Kevin Johnson

Senior Staff Writer – GoldCoin.net

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