Why Your Financial Future Will Be Built Upon the Chinese Yuan

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If you have any illusions, put them aside now. It's the Yuan's world – the West is just living in it, or borrowing from it as the case may be.

Demand for the Yuan is growing at such a staggering rate that your financial future will be built upon it.

Admittedly, this is a very tough concept for most people to wrap their minds around. It's tough to lose "your" spot at the top and it's even tougher to know you're losing it and not be able to do anything about it because the leaders who are responsible for maintaining that position don't understand the end game.

It's made worse by Washington's insistence that the dollar is still a weapon when large swathes of the world now believe it's a liability. It's exacerbated by Europeans who forget that a sound currency actually requires underlying economic stability. It's threatened by the latest crop of Japanese bankers who seem determined to print money into oblivion.

Sadly, this is not new. The old guard always fights for the status quo when something different or not well understood like the Yuan comes onto the scene.

The Rise of the Yuan

When you think about it, this isn't too hard to understand because there's usually a lot of sharing as trust builds between nations during periods of mutual development. Concurrent economic and intellectual openness promotes new monetary relationships then…BANG!

Suddenly, some become far more equal than others, to borrow a phrase from George Orwell's allegorical masterpiece, Animal Farm. Very quickly the growth that everybody once enjoyed craters, placing new restrictions on the creativity and wealth needed to sustain it. Absent a logical outlet, the excess energy and economic wealth that would have been previously incorporated into the old system goes somewhere else.

That somewhere else is the Chinese Yuan, and it will be for decades to come. Everything else is just a sideshow.

For example, lately people have been talking in angry terms about the huge piles of cash U.S. corporations hold offshore. Most are frustrated that corporations find it more profitable and less risky to keep it there. They don't draw the connection between that cash and redirected wealth.

Apple, if you've been reading up lately, is the poster child for what I'm talking about.  It has over $137 billion in the bank, with some 70%, or $94 billion, being held offshore. They assume it's all in dollars.

What they don't realize is that huge chunks of cash are held in other currencies, chief among which is the Yuan.

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About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. Howard S | March 11, 2013

    What about buying the Yuan coins?

    • Keith Fitz-Gerald | March 13, 2013

      Great question Howard. I've thought a lot about this. There's currency and there are collectible coins. The first, assuming you can easily exchange them, is just as valid a means of investing in the Yuan as anything else. But you run the risk of theft and there's storage to consider. As for the latter, I am unfamiliar with the collectable markets so I am not sure what there is or isn't in that department. But I can certainly take a look and consult with some coin experts. I'll have an update shortly. Thanks for being part of the Money Morning family! – Keith :-)

  2. soc | March 11, 2013

    Why is CYB still at the same level as in2008,while the yun apreciated +20%I hear this saying for many years that the Chinese currency will have an outbreak,probably it will happen once but dont see how to invest in it. Many Chinese companies with a listing in NY are alleged bookcoockers and CYB didn't do much since 5 years.

  3. Marie | March 11, 2013

    Between this and the 'strategic' foreign aid we give to places/governments like Egypt, Pakistan…does it not give pause to possibly forgetting there's more to life than money? If we gain the world, but lose our collective soul as well as our individuality, what will we have?

    • Owen | March 12, 2013

      Foreign aid is not "aid". The millions given to Egypt went into Mubarak's personal bank accounts. In return, Mubarak signed off on 100's of Billions in arms purchases for the Egyptian military. The US got profits, tax revenues, and jobs for the happy people that reelected their congressmen.

      Remove the 1 trillion in world wide arms sales from the US economy, and we might become a beggar third world nation very quickly.

  4. TOM SCOTT | March 14, 2013

    YUM may be the best way to get Chinese exposure. They will be opening another 700 stores this year. Their KFCs & Pizza Huts are killing it, even after the recent chicken scare.

  5. Mag Gash | March 23, 2013

    This is an eye-opener of nation's financial strength. All nations whether from Asia, Europe or US are striving to keep up with the pressures of economic recession.

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