Gold will fly in 2013 as China moves to back the yuan with precious metal: Leeb

Renowned investor and commodities specialist Stephen Leeb says precious metals are set to fly in 2013 as the Chinese move to back the yuan with gold.

Speaking to King World News Leeb says that once the Chinese are forced to recapitalize their banks and expunge bad loans from their balance sheets, they will happily acquiesce to the inclusion of gold as a Tier-1 asset under proposed amendments to the Basel Accord. China can then use appreciation of gold to cover their debts and restore their domestic banking system to rude health.

Leeb also expects that the Chinese will shift from holding their reserves in OECD currencies to gold and silver, with their long-term game plan being to back the yuan with precious metal.

In a world where there is a race to the bottom in currencies, do you really think the Chinese want to hold their reserves in euros, dollars and yen? No. They are going to hold them in gold and let gold go higher. This may be the year in which the Chinese really do let gold fly. When gold starts underlying their currency, it’s game over. The Chinese have won.

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