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The Daily Reckoning Weekend Edition Saturday, November 21, 2009 Taipei, Taiwan Gold surpasses $1,150, but here's another reason to load up, Obama in China, a land of opportunities and crises, Plus, investing in the WAGE group, lost mothers and plenty more... --- The Agora Financial Reserve is Officially Open --- We'll Pay You $5,909 to Cancel Your Agora Financial Subscription Right Now We know it sounds preposterous, but it's true. Not only that... If you act now* you'll receive every one of our elite publications... And that's in addition to the nearly $6 grand we just mentioned. Just give us 10 short minutes out of your day, and we'll explain everything. *The doors to the Agora Financial Reserve are only open a few short weeks out of the year. We suggest you take advantage while you can. --------------------------------------------------------------- Joel Bowman, reporting from Taipei, Taiwan... Too many and too few people...too much and too little money...a history so epic many would rather forget it and a future so uncertain everyone is willing to gamble on it. One sometimes gets the feeling that China's economy is beyond control; a behemoth, the likes of which the world has never seen, hurtling forward at an astronomical rate; unpredictable and, to the confusion and dismay of all who seek to know her, stubbornly and unapologetically elusive. Jim Chanos, perhaps the world's greatest short seller and the smartest guy in many a room, is bearish on the Middle Kingdom...bearish as in, "China is Dubai times 1,000, if not a million" bearish. Jim Rogers, arguably the best resource investor around is bullish...bullish as in, "China is going to be the most important country of the 21st century," bullish. It goes without saying that your editor is no Chanos. And he is no Rogers, either. Heck, he's not even a Jim! To us, China is a riddle, wrapped in an enigma and encircled, as the Internet gurus inform us, by The Great Firewall of China. For many spectators like us, any world where Google is not the number one search engine might as well be another planet entirely. And yet her allure, dripping with possibilities and opportunities, is irresistible. How many western entrepreneurs have scratched their heads and thought, "If only I could convince one in a thousand people to buy my gadget...read my book...listen to my message." In China, if you have a one-in-a-million T-shirt on, 1,300 other people are walking around in the same one. By the middle of this decade, many already assumed that the 21st century would belong, in some way, shape or form, to the Chinese. Their population was simply too overwhelming too compete with, and too competitive to overestimate. Where the US has nine cities with a population exceeding one million, and the UK has two, China has more than 160. Fantastic stories of megatropolis construction sites filled the world's in-flight magazines. Twenty cities to each house twenty million people...the greatest migration of mankind ever...We watched as GDP in the Middle Kingdom ran white hot, clocking double digit growth year after year after year. Global supremacy seemed all but a mathematical inevitability. Their factories chugged away night and day as consumer economies in the west shipped boatloads of cash to China's shores in exchange for anything and everything the people there churned out. The Chinese government was so encouraged by its people's industry and progress they even lent westerners the money with which to buy their local knickknacks. Nobody - save, perhaps the Vietnamese and Cambodians - would work like the Chinese...and nobody would do it at such a low price. Nobody, it seemed, could match their vigor. Indeed, American consumers were so impressed by Chinese industry they mortgaged their own houses and futures to finance it. But then the consumers got the big squeeze...in a bad way. The credit crisis hit Wall and Main Streets. It was around that time when China's stock market began tracking the approximate trajectory of AIG executive popularity polls. Within a year almost two thirds of the value of Shanghai's CSI 300 Index had been wiped out. Foreign direct investment evaporated as institutional funds in far off lands repatriated allocations to cover crushing margin calls back home. Factories slowed. Many closed. Clouds over Beijing started spreading rumors about "sunshine" and "fresh air." For the first time in a decade or more, people began to look beyond the mind-boggling figures on China's scoreboard. Gun-shy investors grew suspicious about sustainability and capacity - specifically overcapacity. In short, they wanted to know if China could survive with her best customer, the US, curled up in the fetal position across the Pacific. If consumers in the great consumer economy were forced to economize, what would happen to China Inc., some 70% of which relies on exports? The problem, the experts said, was that while Americans had gorged, the Chinese had fasted. Where the west had spent, the Middle Kingdom had saved. There was a catastrophic imbalance, they said, an imbalance that threatened to spin the world off its axis and send it into outer space. And so, in the middle of the most epic, debt-fueled financial crisis in a century or more, the world pinned its hopes for recovery on the Chinese factory worker. "Start spending!" they implored him. "Grab a credit card and start amassing some debt! If you don't, we're surely all doomed!" So far, so good, according to Romeo Dator, co-manager of the China Region Fund. Dator points out that retail spending in China remains strong, up 16% in October on figures from last year. Industrial production is up by the same margin, he says, and housing starts, for the second straight month, are up 50% year over year. Dator cites domestic consumption as one of his five reasons to be bullish on China. Puru Saxena, a regular contributor to the DR who is based in Hong Kong is also enthusiastic about China's robust consumption. Saxena points out that 900,000 cars are sold each month there, and that, "by the end of this year, the Asian powerhouse will replace America as the world's largest market for automobiles." The trend is similar for other household items such as refrigerators, motorbikes and mobile phones. Then there's the $2.3 trillion (with a "T") China holds in foreign reserves...the war chest of strategic resource investments it has throughout Asia, Australia, Africa, Canada and South America...strengthening trade ties with other emerging nations...a Daily Reckoning satellite office in Taipei...the list goes on... But nothing ever moves in a straight line, dear reader - neither up nor down. China has more political headaches than a DC shrink and some 200 million of its people still exist - barely - on less than $5 per day. In many ways, it is also an environmental disaster zone with the people feeling the very real effects of their country's rampant growth. According to Ma Jun, director of the Beijing-based Institute of Public & Environmental Affairs and author of China's Water Crisis, some 400 of China's 600 cities are facing basic water shortages, including 100 that may see serious shortages. Just to meet the needs of its city dwellers, Ma estimates that the country needs another 40 billion cubic meters of water per year, or about one-tenth the volume of Lake Erie. And that's to say nothing of the 300 million residents living in rural areas. Indeed, these are no small problems, but neither are China's aspirations modest in size or scope. Fortunes will be made and lost in the coming century all around the world...more so, on both counts, in China. --- Gold Goes Ballistic...Now Do You Believe Me? --- From Hulbert's No 1-Ranked Advisory Letter Over 5 Years, Our Most Shocking Forecast Yet... GOLD $2,000 "I'm so sure gold will soar higher I'll even make you a guarantee... plus, I'll give you five entirely new ways to play the trend..." "Including one hidden way to snap up gold... for less than one penny per ounce..." How can that be possible? Give me the next four minutes and I'll show you how... Your Full Step-by-Step Gold Investing Report Here. --------------------------------------------------------------- ALSO THIS WEEK in The Daily Reckoning... Another Reason to Buy (More) Gold By Chris Mayer Gaithersburg, Maryland The age of de-leveraging is upon us. Bad news for the US economy; good news for gold. For the past 60 years, corporate debt has grown faster than the economy - 4.1% annually for debt, compared with only 2.7% for the economy as a whole. In short, more and more debt went toward producing each dollar Debts... They Grow Up So Fast! By Puru Saxena Hong Kong The 19th century belonged to Britain, the 20th century belonged to America and in the 21st century, China will rule the business world. Whether you like it or not, this transition is already underway and it will intensify over the coming decades. A Few Words About Nalco By Chris Mayer Gaithersburg, Maryland Over the coming decade, I strongly believe that most of the best investment opportunities will emerge from the four following natural resource categories: Water, Agriculture, Gold and Energy...or what I call the WAGE group. And some of those opportunities will feature a combination of these resource categories. One of the most intriguing combinations is what I call the energy-water nexus. Five Reasons China is Not a Bubble By Romeo Dator San Antonio, Texas A year ago, nobody thought China could manage 8 percent GDP growth in 2009. With year-to-date growth coming in at 7.7 percent through the first three quarters and getting stronger, China is poised to break that 8 percent mark rather easily. Bare Branches By Bill Bonner London, England Last month, a Hong Kong apartment set a record. It sold for $56.6 million, which works out to $11,350 per square foot - the highest price ever paid for a pad in China. --------------------------------------------------------------- The Weekly Endnote: If you haven't already done so, be sure to sign up for Tuesday's free and exclusive interview with Dr. Marc Faber, editor of The Gloom, Boom and Doom Report. Simply click on this preview for all the info you need. Until next week... Cheers, Joel Bowman Managing Editor, The Daily Reckoning   The Daily Reckoning - Special Reports: Gold: The Truth About Gold Fiat Currency: Using the Past to See into the Future "THE GREAT AMERICAN RECOVERY RP-OFF" Brace yourself for what's about to go down as the BIGGEST FINANCIAL SWINDLE in world history.