The day China says its currency is backed by gold

It’s common knowledge the Chinese have about $2 trillion in foreign currency reserves. What a nice, fat bank account.

Donald Trump has gained a lot of airtime recently talking about how China has been ripping off the United States over the previous decades, artificially devaluing the yuan and protecting China’s own companies at the expense of ours, stealing our technology, and attacking our infrastructure via cyber intrusion. All of that gives one the sneaking suspicion that China is preparing for something, something bad, something devastating for the United States and our children’s future. Chinese actions in the South China Sea adds to this perception, this gut feeling. Why would the communists be building military bases out of nothing so far from home? There really is only one conclusion. Although the China apologists want to dismiss this narrative, taunting its proponents about their tinfoil hats, that uneasy feeling remains vibrant, just the same.

But there is another way China is preparing for something, something inevitable. Much less known, outside of financial circles, is the way China has been quietly amassing gold. The history of Richard Nixon taking the United States off the gold standard has been long enshrined in monetary conspiracy theorist lore. As America turns the corner on $20 trillion in sovereign debt, on the way to $30 trillion, our fiat currency is worth only what the market thinks its worth or the paper it’s printed on. The gold holdings of the Federal Reserve Bank of the United States are reportedly large, around 8,000 metric tons; but, this figure is mostly dismissed as untrustworthy, due to the Fed’s accounting practices with the blessing of the International Monetary Fund (IMF).

About 30 days ago, China announced its five-year update on its holdings of the precious metal, admitting an increase of about 60 percent to 1,658 metric tons. Last week, in a move that looks like a change to future monthly updates, that figure rose by about 20 tons. This is only the gold that China will admit to hoarding. The actual figure could be much more. Why would China, and Russia for that matter, be building up such large amounts of gold? I think the answer is obvious.

If it walks like a duck and talks like a duck, it’s a duck, no matter what the Keynesian spin masters say.

There is long Chinese strategic history of playing the long game in geopolitics and warfare. The Chinese are willing to lose certain short-term battles for the ultimate victory. The ultimate victory in this case is the defeat of the United States as the global financial hegemon. It is no secret either that the Chinese want to see the yuan achieve its rightful place (in their eyes) as one of the world’s reserve currencies, the open manipulation of Chinese markets, which has been on display in recent weeks, notwithstanding. But I believe the real goal is to achieve global financial dominance in one fell swoop.

This will be the day that Chinaannounces its currency is backed by gold.

Credit to Washington Times

http://www.washingtontimes.com/news/2015/aug/18/l-todd-wood-day-china-says-its-currency-backed-gol/