[Editor's Note: Money MorningInvestment Director Keith Fitz-Gerald is one of the world's leading experts on Asia, especially China. Right now, Fitz-Gerald is leading an investment tour of the Red Dragon, and he'll be sending along regular investment travelogues to update Money Morning readers on his latest observations. Fitz-Gerald previously wrote about China’s fast-growing auto market.] By Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report BEIJING, The People’s Republic of China – For the debt-ridden West, the global financial crisis has been an unmitigated disaster, forcing the so-called developed economies to take on financial commitments that will serve as burdens for years, if not for generations. For cash-rich China, however, the financial crisis is shaping up to be a major opportunity, with payoffs that will last for decades. You want proof? The China Council ...

HIDDEN VALUE

Dear Reader, 

Is China buying gold to protect itself from the worst financial crisis in history? 

Although we can’t be 100% sure, we can make a compelling case. 

This from Ed Steer, who writes for our friends over at Casey Research… 

In the last three days, I’ve noticed that there has been a change in pattern during Far East trading. It’s not a lot, but it’s something I haven’t seen since I started watching the Kitco gold charts about ten years ago. A buyer [either going long, or covering short positions] is active in Hong Kong trading [in both gold and silver] that I’ve never seen there before. Is it something… or is it nothing? I know that three days activity can hardly be considered a trend… but

…

The People’s Bank of China continued nipping away at its one-year lending rate, cutting off 0.27 percentage points to 5.31%, its fifth rate cut in three months.

China also lowered its deposit rate by the same amount and reduced the proportion of deposits lenders have to hold as reserves by 0.5 percentage points to 15.5%, Bloomberg reported. All rate cuts will take effect Tuesday.

China’s slow burn of its interest rates is a calculated response to falling numbers across its board: gross domestic product could fall as low as 5% next year, way down from the 11.7% growth in 2007; exports fell for the first time in seven years last month; imports and manufacturing numbers also fell.

Unemployment figures are getting ugly, too. So far, the global financial crisis has taken 4 million city jobs from migrant workers and pushed urban unemployment up to 9.4%, the Chinese Academy

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The People’s Bank of China continued nipping away at its one-year lending rate, cutting off 0.27 percentage points to 5.31%, its fifth rate cut in three months. China also lowered its deposit rate by the same amount and reduced the proportion of deposits lenders have to hold as reserves by 0.5 percentage points to 15.5%, Bloomberg reported. All rate cuts will take effect Tuesday. China’s slow burn of its interest rates is a calculated response to falling numbers across its board: gross domestic product could fall as low as 5% next year, way down from the 11.7% growth in 2007; exports fell for the first time in seven years last month; imports and manufacturing numbers also fell. Sign up below… and we’ll send you a new ...

Key News• Stocks rose in Europe and Asia and U.S. index futures climbed after China unveiled a $586 billion plan to stimulate the economy and world leaders urged more cuts in interest rates. (Bloomberg)Key Reports Due (WSJ):No economic events are scheduled for today.

Quotable “That the sun will not rise to-morrow is no less intelligible a proposition, and implies no more contradiction, than the affirmation, that it will rise.”

David Hume

FX Trading – China to the rescue—maybe!  And ChartViewChina’s new fiscal stimulus package is receiving rave reviews across the board this morning.  Bond prices lower, stocks higher, oil higher, gold higher and the dollar getting whacked—it’s déjà vu all over again for the risk appetite crowd.

Should we rejoice and jump back in to everything once bubble-icious?  Or does China’s action represent a sign of real fear and desperation as it watches its export demand crumble

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