(4 pm. – promoted by ek hornbeck)
All week I’ve been seeing references to this headline:
“China could announce that it holds 30,000 tons of gold to back the Yuan/Renminbi.”
As a Forex trader, the story took me by surprise, even though China has been stockpiling for years, and is the world’s largest gold producer. Also, it’s not like China to pull this trigger so fast. However, in the South China Sea last week, the US started militarily terrorizing China with war ships and fighter jets – and China warned (in so many polite words) that the US planted the seeds of its own doom.
So, maybe that’s what this is all about.
If it is true that China has 30,000 tonnes of gold, (which is almost more gold than the rest of the world’s central banks, combined) then it is game over for the US Dollar.
Here’s what would happen next:
All global banks would seek to trade in Yuan rather than Dollars. But, China does NOT want the Yuan to be used as the world’s trading currency. They have absolutely no intention of redeeming Yuan for gold; they are not fools. Instead, China wants to be a major part of a global synthetic trading currency, in particular SDRs (Special Drawing Rights) issued by the IMF.
The dying US empire wants to block China as a major player at the IMF, but it fatally screwed itself by being the only IMF member nation to miss the IMF’s December 31st, 2014 reform vote deadline. (I explained this rapidly-approaching, final stage of US monetary collapse in my essay, America’s Mein Kamph.)
So, China will demand that – if the US wants to continue to participate as a global economic partner at the IMF – the Fed must show the world the existence of its gold for international audit, just as China will do.
The Fed either cannot or will not do this. Many believe it has very little gold left. Countries are currently demanding the return of their gold stored at the Federal Reserve in New York. The largest depositor, Germany is still waiting. Even the UK is standing in line for its gold because Switzerland just demanded the return of its gold from that other failed Anglo empire, Great Britain. As you can see, the world has lost all faith and trust in the US debt-based, fiat economy. Especially now that the Petrodollar is dead, thanks to the profoundly self-destructive US sanctions on Russia:
Show us the Money = Checkmate on the US.
Shameful. The US hoisted on its own IMF petard.
By the way, would this be a good time to buy gold?
Especially since the Chinese just eclipsed the century-old London daily gold-fix:
China conducted trial runs for the planned launch of a yuan-denominated gold fix last month, three sources familiar with the matter said, in a sign the world’s second-biggest bullion consumer was moving closer to creating a benchmark price.
The state-run Shanghai Gold Exchange (SGE), on whose international platform the fix will be launched, conducted the trial with major Chinese banks and a few foreign banks, the sources said this week.
China, also the top gold producer, feels its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.
Even though gold is up $400 an ounce since 2007, at $1,200 an ounce, it looks really cheap to me, everything considered.
What do you think?
Very few Anglo investor-pundits have the ability to parse the following words: “China does NOT want the Yuan to be used as the world’s reserve currency.” Their brains simply cannot grasp the idea that China does not share their psychopathic need for global currency supremacy.
One commercial commodities trader did weigh in, astutely, on the possibility of China’s coming gold bombshell.
Rob Kirby arranges deliveries of gold, measured by the ton, to his central bank clients. He contends that news that China may disclose it has 30,000 tons of gold – and that will be devastating for the United States.
Kirby contends, “I think the implied message is we are going to show you how much we have, and then you are going to have to show us how much you have. . . . America, very likely doesn’t have, in my view, doesn’t have the gold they claim to have. They also probably spent a lot of other people’s gold in safe keeping.”
What would happen to the U.S. dollar if China revealed a vast holding of physical gold?
“…it could cause a sudden drop in the U.S. dollar, which could signal a tsunami of dollars coming back to America and could set off a very, very ugly, ugly bout of inflation… in America.”
Kirby points out, “The problem is our global capital markets have become criminal cesspools. Our global capital markets right now are crime scenes. The regulatory regime installed by the leadership of America to prevent this all from happening has been vacant.”
“It started with the repeal of the Glass Steagall Act back in the late 1990’s. You got to look back to see the context of where this train left the tracks. But, this is not a derailment. The derailment occurred a long time ago. Right now, the engine of the train is in the middle of a corn field, and it’s still moving.”
On the timing of the next financial calamity, Kirby says, “It wouldn’t have shocked me if it happened last fall. It is going to happen. I don’t know what day that is going to happen, but that is a guaranteed outcome of the trajectory we are on right now. People who have their net worth solely in financial assets, paper instruments, are going to witness, at some point, an extreme reduction in their standard of living.”
The floor is open and I’m really interested in your opinion.
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The day when wieners die on the barbecue for our sins.
In combination with TPP & TPIP, that has no currency controls, this could be very devastating for the US economy.
Question: What effect would this have on the European economy? and countries already in economic distress like Spain and Greece (I know there are others, just can’t recall them off hand)?
… eight collapses of the US dollar used to sell gold, since pending collapses of the US dollar are the best story to use to sell gold. Describing the confrontations in the South China sea over the reefs that China is building up into islands as part of their territorial claims in the South China Sea as US warships “terrorizing” the Chinese over-states how easily scared the Chinese are by US warships operating in what the US and some ASEAN nations claim to be international waters and what the Chinese claim to be Chinese waters.
We will learn this month whether the RMB will join the Special Drawing Right … but leave it to Americans to believe that its primarily about the US$. China’s RMB joining the RMB is about ongoing economic reform in China, and whether or not China wants to end capital controls.
But the key point as to whether this all spells the collapse of the US dollar is the repeated one:
… which implies that the Chinese do not want to take steps to replace the US$ as the world’s reserve currency with the RMB.
Since otherwise, what other option is there? The Euro is built broken from the ground up, so it can’t take over as the world’s reserve currency, the pound sterling is obviously not going to reclaim that role, the Swiss currency is in the SDR in deference to tinpot dictators who don’t want all of their reserves in ready reach of being frozen in a squabble with the West over something like brutal massacres.
However, its also important to make explicit something implicit: the Chinese do not want at this time to take steps to replace the US$ as the world’s reserve currency. They are also slowly laying the groundwork for it to take over that role if they change their mind about it sometime in the future.