dwb, Gold maybe a bubble, but it is most certainl...

dwb,

Gold maybe a bubble, but it is most certainly not being be promoted by GS and the FED.

Both entities benefit from the fungibility of a fiat currency. It is the essence of fiat money that benefits bankers the most. If bankers had to operate on a 100% reserve ratio (i.e. like how you live our lives, you can only lend your buddy the CASH in your wallet and in your bank account) they would most definitely choose gold.

An alternative to your "The FED will sell its gold to pay the Chinese" is this.

What if the Chinese will only except future US paper backed by gold?

Its an alternative thought to the current hyperinflation/deflation debate.

In 2008, the FED/US Treasury attempted to tell the Chinese that Fannie/Freddie paper was not explicitly backed by the US Treasury(Really US citizens). The Chinese called our bluff and we bailed out Fannie/Freddie bondholders (Maiden Lane 1 was 1/2 Fannie/Freddie paper.)

How owns that paper? Who is buying that paper today?

I hear the Chinese are buying US MBS and shunning US Treasuries. Why?

Because 90% of all mortgages written today are currently guaranteed by the US government. At least this paper is backed by a physical homes and thats the point. The marginal utility of a home is much harder to debase.