I think this is right on target.

Since before the meltdown I have believed in the intrinsic safety of commodities and so invested heavily in NORONT and others. My faith has been shaken in this stance but now rekindled by recent events.

China is smart.

Use the fiat you have and buy commodities, something of real value, nickel, copper, gold. Stockpile it. Use it to back your currency.

Also in the news... china recommends that the IMF sell ALL its gold so it can help the less fortunate countries. Nice thought but guess who would love to buy all that gold? China.

Lastly, as much as China complains about US fiat, its own currency isn't worth a plugged nickel, and so it would do well to stockpile metals to back it up using these foreign reserves while it can.

And while Beijing is calling on the G-20 to replace the US-dollar as the world reserve currency, the Chinese central bank is simultaneously printing vast quantities of yuan. The rapid expansion of Chinese M2 is buoying gold prices in Shanghai, since the Chinese yuan has no intrinsic value whatsoever, but for the fact that it has been decreed as legal tender. [Gary Dorsch]

How long before other countries catch China's logic and start stockpiling themselves. They would be smart to do so, soon no one may want the other guys fiat currency.

BK