Extracting the main part of this article but one SOLID reason to be holding gold shares/equities
Analysts warn that Russia and China have both been stockpiling gold in recent years in what is seen as a bid to reduce their dependence on the US dollar. The major casualties of a US-China trade war? The US ... and Australia
How will Australia fare if Washington launches a full-scale trade war with China?
The question is worrying investors as US-China tensions flared menacingly on Monday night, with US President Donald Trump's top trade negotiator warning that China's economic model posed an "unprecedented" threat to the world's trading system.
In his first major speech, US Trade Representative Robert Lighthizer warned that China was a "substantially more difficult" challenge than those faced in the past.
"The sheer scale of their coordinated effort to develop their economy; to subsidise, to create national champions; to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented," he said.
Although Lighthizer didn't prejudge the outcome of the probe into China's alleged theft of US intellectual property – which the Trump administration announced last month – he said he gets "an awful lot of complaints", especially from the heads of major US companies, about having to hand over their technology to joint-venture partners in China and on the issue of Chinese piracy.
Lighthizer's comments come in the wake of President Trump's decision last week to block a Beijing-backed fund's $US1.3 billion ($1.6 billion) bid to buy a US semiconductor company, amid fears the deal could transfer valuable intellectual property to China and jeopardise US national security.
And US Treasury Secretary Steven Mnuchin last week threatened China with the ultimate sanction – losing its access to the US financial system – unless Beijing complied with new United Nations sanctions against North Korea.
But billionaire commodity trader, Jim Rogers, has warned that the US will be the main casualty of a major trade war with China, as it will accelerate the US dollar's demise as the global reserve currency. Predicting hurt
"If they put sanctions on China in a big way, it brings the whole world economy down," he said in an interview with Reuters published on the weekend. "And in the end, it hurts America more than it hurts China because it just forces China and Russia and other countries closer together."
He added that "Russia and China and other countries are already trying to come up with a new financial system. If America puts sanctions on them, they would have to do that much faster, and in the end America will lose its monopoly on the financial system, which will hurt America more than anybody."
Analysts warn that Russia and China have both been stockpiling gold in recent years in what is seen as a bid to reduce their dependence on the US dollar.
Rogers warned that a US-China trade war would also trigger a big upheaval in the global economy. "We are probably going to have a global economic problem, maybe even crisis, in the next couple of years. This may be one of the things that start it."
Australia risks nasty blow
Analysts warn that Australia would also be a major casualty of a US-China trade war, which would hit Chinese economic growth and cause imports of Australian commodities to collapse.
Prices of key exports such as iron ore and coal would likely slump, delivering a big hit to national incomes.
A sharp decline in economic activity would deliver a nasty blow to Australian households, already struggling with low wage growth and record debt levels.
And with the cash rate sitting at only 1.5 per cent, the Reserve Bank of Australia would have little scope to slash interest rates to cushion the devastating impact of plunging commodity prices.
Australian policymakers keep a vigilant watch on the robustness of the Chinese economy. On the weekend, Treasurer Scott Morrison said China's ability to safely defuse its growing debt burden has improved after seeking personal assurances from one of Beijing's most senior leaders that deleveraging would not derail the best synchronised global economic upswing this decade.
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