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Does China Plan To Back The Yuan With Gold And Make It The Primary Global Reserve Currency?

Chinese Renminbi Yuan - Photo by MiLu24What in the world is China up to?  Why are the Chinese hoarding so much gold?  Does China plan to back the yuan with gold and turn it into a global reserve currency?  Could it be possible that China actually intends for the yuan to eventually replace the U.S. dollar as the primary reserve currency of the planet?  Most people in the western world assume that China just wants a "seat at the table" and is content to let the United States run the show.  But that isn't the case at all.  The truth is that China doesn't just want to compete with the United States.  Rather, China actually plans to replace the United States as the dominant economic power on the planet.  In fact, China already accounts for more global trade than the United States does.  So what would happen one day if China announced that it was backing the yuan with gold and that it would no longer be using the U.S. dollar in international trade?  It would cause a financial shift so cataclysmic that it is hard to even imagine.  Most of those that write about the "death of the U.S. dollar" usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned.  China owns about a trillion dollars of our debt, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.  Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative.  But a gold-backed yuan would change all of that very rapidly.

And without a doubt, the Chinese government has already been very busy promoting the use of the yuan in international trade.  In a recent note, John McCormick of RBS Group stated the following...

Financial crises in the US and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5-6 billion daily – double what they were a year ago.

A number of factors suggest that the Chinese authorities want to make RMB internationalisation happen by 2015.

For China, having a global reserve currency is not just about economics.  It is also about power.

McCormick ended his recent note this way...

China’s new leadership faces a number of problems. The country’s economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound.

But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.

Similar sentiments were echoed in a recent article in the Wall Street Journal...

Beijing is undertaking a long, gradual campaign to establish the yuan as a more market-oriented, international currency. China's State Council, or cabinet, said in a statement this month that the country would draft a plan to allow the yuan to become fully convertible. Meanwhile, the People's Bank of China is guiding the currency higher and set the median point of its permitted daily trading band last week at the strongest level ever.

We don't hear much about these sorts of things in the western media, but the convertibility of the Chinese yuan is a very big deal.  Up until recently, the yuan was only directly convertible into dollars and yen.  But now that is rapidly changing.  So far this year, the Chinese government has entered into currency convertibility agreements with Australia and New Zealand.

So instead of having to change yuan into U.S. dollars to trade with Australia and New Zealand, now China can cut U.S. dollars completely out of the process.

But right now there is nothing that really gives the Chinese yuan a significant competitive edge over the U.S. dollar.  If Chinese authorities truly want the yuan to end up replacing the U.S. dollar as the primary reserve currency of the planet, they need to do something that will make the rest of the world want to use it.

And they could do that by backing the yuan with gold.  In fact, there are persistent rumors that China has been busily preparing for that.

For example, the Economic Policy Journal recently pointed out that Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush, is claiming that China has plans to turn the yuan into "a hard, gold-backed currency" that will have a distinct competitive edge over the rapidly depreciating paper currencies that the rest of the globe is currently using...

The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyers of gold, mainly off-market. They want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue.

The recent bilateral currency deals with Australia, France, Russia and Singapore, and many others, reflect this desire to displace the USD as the world’s reserve currency.

It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.

Other analysts are also fully convinced that the goal of the Chinese is a gold-backed yuan.  The following is what money manager Stephen Leeb told King World News recently...

Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.

The move in the yuan overnight was one of the most significant upticks I have seen. Like I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that’s over 2,400 tons of gold per year on an annualized basis.

This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn’t just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese.

It’s only a matter of time before the Chinese back the yuan with gold. This will push the yuan front and center as a key element in terms of being part of the world’s reserve currency basket. China gets the message. They are doing whatever it takes to establish their dominance in the world, particularly in the commodity arena. Their currency is flying and they are importing as much gold as they possibly can.

And without a doubt, China has been hoarding massive amounts of gold.  Everyone agrees on that.  But what nobody knows is exactly how much gold China currently has stockpiled, because China is not telling anybody.

One recent estimate put China's gold reserves at more than 7,000 tons of gold, but it could potentially be far higher than that.  When China does finally tell the rest of us how much gold they have, they will probably be just a move or two away from checkmate.

What we do know is that China is importing absolutely enormous amounts of gold right now even though China is also the number one gold producer on the planet.

According to Reuters, more than 223 tons of gold was imported into China from Hong Kong in March.  That smashed the previous record of 114 tons in December.

Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 is going to absolutely smash what we saw in 2012.

Obviously something is happening.

China is massively hoarding gold at the same time that it is trying to substantially raise the international influence of the yuan.

It doesn't take a genius to see where all of this is headed.

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy.  Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar.  At that point you could forget about cheap gasoline or cheap Chinese imports.  Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively.  If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living.  Today, most U.S. currency is actually used outside of the United States.  If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.

So keep an eye on China, and look out for any news about the yuan.

It won't happen next week or next month, but eventually we could see China back the yuan with gold.

When that happens, it is going to be a complete and utter financial disaster for the United States.

 

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  • Tim

    “Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively.”

    Yes. The fact that we have the primary reserve currency is really the only thing keeping the house of cards from imploding, in my opinion.

    • cateye

      I share that opinion. I wish more would take their heads out of the sand and see what is coming at us like a freight train.

    • Mustard Seed

      You hit the nail on the head with this one, Michael.

      No government in the world ever pays its debts. The governments just keep passing the buck. Eventually this whole mess ends up in currency wars and sovereign debt crisis. Will Europe cave first or Japan…who knows? But every central bank in the world is in a race to buy as much gold as they possibly can. China is no different. They are setting up trade deals with other countries promising who knows what. Whatever it is, must be better than than just another fiat currency. Otherwise, there is no point.

      With over a billion hungry mouths to feed, I doubt they are going to sit around waiting for the U.S. to get its act together. They are betting our politicians keep doing exactly what they’ve been doing…digging a deeper hole.

      • Mustard Seed

        Tim, I didn’t mean to post my comment under yours, but definitely agree with you.

    • markthetruth

      Our Entire Life is more then Just Money . That is the issue with the World . Our life’s should depend on serving Gods Message. Like someone wrote the other day, the rich will not make it Past Heaven’s Gate . Meaning Hoarding of ” anything one thing ” not just Money is Greed . He has Given certain ones with excess of one thing or another and to see if they do as he would expect , give to the needy people and not think of yourself as he has done for us.

      the end…

      • TheFireWithin

        Well said!!!

      • Pauly

        Saving is greed? WTF

  • MichaelfromTheEconomicCollapse

    I know there are a lot of people out there that have very, very tight budgets right now, and so I wanted to let you guys know that the Kindle version of my new novel has been temporarily reduced to $2.99…

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    If you need it, a free reader which will enable you to read it on any computer can be found here…

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    If you have any questions about any of this please let me know.

    Michael

    • chris

      How do you find the time.

      • markthetruth

        You can’t Find Time ! Your given 24Hrs a day , Use them Wisely and You wouldn’t Have to Find Any.

        the end…

  • Joe Nobody

    I have heard and read for a few years that china might be planning this. Would it be a good idea, atleast as a hedge, to buy Chinese currency at deflated rate in anticipation of the reserve currency switch?

    • Earl

      If the bankers know people are buying Yuan like people were buying silver and gold, they might intervene by shorting the markets.

    • MeMadMax

      They are not just planning it, they are doing it… Since 2008 it seems their plans have gone into overdrive too.

  • jsmith

    Great article Michael! Yet, most people will not understand or care due to ignorance.

    • MichaelfromTheEconomicCollapse

      Thank you – hopefully people will understand the importance of this article.

      Or at least we can keep trying to wake them up. :)

      Michael

      • MeMadMax

        They won’t wake up till the power goes out, water stops coming out of the faucet, and they figure out that milk actually comes from a cow… I live in los angeles and yes, they are that stupid here…

      • LazyIke

        This article was well written so that ordinary people can understand. It also makes sense and is logical. This is how the currency will go followed by the bond market and then the stock market followed by the marco economic implications as outlined by Paul Craig Roberts.

    • Earl

      Yeah, and nobody even wonders why there is a line-up of hundreds of people for one job vacancy these days.

  • K

    China is a communist country, at least when it comes to planning Meaning the military and economic goals are intertwined. So if you look at their probable military goals. You can to a degree see what their economic goals maybe. In the last decade China has greatly improved and expanded their navy. But not to the point it could defeat the U.S. fleet. Just enough to exclude the U.S. from their backyard. I believe their economic goals are similar. They have said they would prefer a basket of currencies, to replace the dollar. As far as connecting the yuan to gold, I doubt it. They like to manipulate their currency. That is much harder to do, if it is backed by gold. In short does China want to expand their sphere of influence? Yes, and if I was taiwan, or the phillipines, I would worry about that. Just a slightly different point of view in this one area Michael.

    • Sorcha The Dark Eyed Elf

      Not communist. Only communist in name. They have violated the most basic tenet of communism which is to never exploit your workers.

    • Hammerstrike

      Their fleet is to land on the African and maybe South American continent.

      They aren´t going to fight a conventional war against the US.

  • seth datta

    Elites have invested in China to set up the infrastructure for their one-world-gov’t and the Chinese are beholden to the Anglo-American Elites and NOT to the US/UK etc citizens at large. As such, the elites benefit as the chinese citizen takes the economic position that our middle class once held, as our middle class jobs are hemorrhaged over there.

    However, the Chinese economic ‘miracle’ is being mis-managed and they will be beholden to our elites when the fees are due. Google ‘ghost cities’ or somesuch… there are literally tons of ghost cities being built that no-one can afford to live in, but the Chinese gov’t continues to build these to maintain full employment.

    The global economy is slowing and the Elites have always planned to get us to kill each other off. This is how it all ends. Slowly.

    • Rodster

      It’s been awhile but I believe Michael wrote an article about china’s ghost cities.

    • Hammerstrike

      No, these cities are empty because the Chinese cannot spend the wealth which is being lent to prope-up the US and EU´s borrowed prosperity.

  • GSOB

    China was reintroduced to Christianity in the 19 century. ( First time 7th century)
    There are about 12 million Christian believers, 18 thousand priests and 12 churches or religious sites in China.
    however,…
    Buddhism and Taoism are the most influential teachings in China’s culture today.

    China has the second largest defense budget and it’s the most populous country in the world.

    They’ll be leading the way soon, as the new global utopia of mankind on planet earth, up until Christ comes in with all those that are His..

    • MichaelfromTheEconomicCollapse

      Today there are about 100 million Christians in China. But a whole lot of them are in the underground church.

      Michael

      • Chaz

        And 100 million Muslims

  • Gregge K Johnson

    Michael ,how did you get a copy of the IMF ,s agenda proposed plan?

    • MichaelfromTheEconomicCollapse

      LOL – I think that if you watch the chess pieces move around it isn’t too difficult to figure out where things are heading. :)

      Michael

  • Handog

    “When that happens, it is going to be a complete and utter financial disaster for the United States.”

    And the beginning of WW3.

    • jaded

      I hope there are enough people to stand up to this crap when they declare war. I really don’t want to see them roll out the flags and everyone becoming “patriotic” for a something they don’t even understand. I can’t believe people approve of these invasions into other countries. We do not need to be anywhere but protecting our own border.

      • I am Tyler Durden’s contempt f

        China is no match militarily for the US (their navy only has 1 aircraft carrier). If the dollar hegemony is challenged, many parts of China will be leveled.

        There’s a reason the US is still at the top of the food chain economically; any questions should be referred to the historical evidence: Imperial Japan (1945), most of Latin America (70′s-80′s), Soviet Union (1989), Iraq (2000 is the year they started to denounce the petrodollar), Libya (2010), and soon to be Iran if they trade oil beyond the minimal amounts they are trading now outside of the hegemony of the petrodollar.

      • Gary

        When the war comes, they will be ready. Before the false flag of 9/11 they gave us plenty of propaganda for the citizens to soak in with the line of black and white of the typical “patriotic good guy Americans” vs the evil heartless un-human enemy.

        Remember Independence Day? Predictive programming for 9/11.

        They don’t have to ask us to fight wars for them, they brainwash us with their idiot boxes that are in 99% of all homes in this country. We don’t have to allow them to put anything in our bodies to brainwash us, no sir we buy the brainwashing machines ourselves.

    • cannuck21

      Why would there be a war? What purpose would be gained by killing innocent people? Good luck to China if it is successful in making the Yuan a new reserve currency. Maybe then the crooks and theives who control western governments and corporations might just wake up and begin to think of their own people. Don’t hold your breath..

      • Earl

        The governments and corporations will not think of their own people. China and the USA will end up at loggerheads over the debt, and we all know how warmongering the US government is.

    • MeMadMax

      WW3 is highly doubtful.
      Even in the deepest throws of financial ruin, the ICBM’s will still be there. China and Russia know that. They will be having too much fun laughing at our hardship and getting rich from filling in the financial/economic void we will cause when we collapse to start a war.

      • lifter

        I don’t know, Celente believe these trade wars and currency wars will evolve into world war. By looking at history, the same thing occurred prior to WWII. And, there are enough people to support it/not care. I have a few friends who believed there were no other opportunities for themselves so they headed off to the army and navy.

        • lifter

          believes*

        • MeMadMax

          I agree, WW2/WW1/a few other wars/conflicts were started or at least aggravated by trade wars. But nukes have most definitely changed the game. In my opinion, I think a WW1′like scenario will play out in the future. What will prolly happen is the EU collapses, causing the weaker, smaller countries to start making treaties with each other and the big boys. Then a small conflict breaks out between two countries which drags in more countries, then when one country gets desperate in the midst of defeat, they go grab a nuke, and the rest is history. Or you could have a scenario like the movie “The sum of all fears” however unlikely that would be as all it would take is a coolhead and some communication to defuse the situation.

  • Sorcha The Dark Eyed Elf

    The procession of time. All empires fall. China will rise and fall the same way the United States is and all empires, nations and societies have before. Nothing new here.

  • Jon Kostiner

    Great article, thanks, Michael.

    • MichaelfromTheEconomicCollapse

      You are welcome. :)

      Michael

  • Rufus T Firefly

    25 years ago we were reading the same stories about Japan Inc and MITI. Warren Buffett is right, Matians think we are crazy with all the attention we pay to a moderately useless metal like gold

    • smallergovnow

      thing is it’s been “useless” for thousands of years. think i will learn from history rather than from some ill informed firefly blogger…

  • Scott

    Michael, I would think this would have a big effect on the price of Gold if it happened. Do you agree?

    • MichaelfromTheEconomicCollapse

      Yes, and this is probably something I should have mentioned in the article.

      If China announces a gold-backed yuan, the price of gold (and silver) will absolutely skyrocket.

      Michael

  • markthetruth

    ………..B R I C S …..W O R L D …….B A N K………

    the end…

    • markthetruth

      WOMEN Soon Will Run the America ……
      They are more ambitious than men, and
      Men Messed it Up Enough…

      Women are Now at %40 of the Breadwinners of Families, because of the Single Mom’s and More Women then Men are Graduating With PHD’S.

      Men Will always need Women…

      For in that Real Men need women for Love and will pay and do what ever it takes to Get it.

      and women Will marry Guys just For the Money Old, Ugly , or whatever. And Women more Then Men Can Do Without Se_.

      Women Will Rule Soon !!!
      Men Will End UP Slave’s to Women…

      the end…

  • Faith

    Yup, Greed is deadly. Chinese cities in the US are strong. American first time home buyers have no chance buying a home in California. The Chinese are not just buying Gold, they are buying tons of Real Estate “CASH”. The calm before the perfect storm, total economic collapse.

  • 2Gary2

    Whether or not you believe in a being called Satan or regard the “devil”
    as forces of evil, conservatism seems to be part of that evil force.
    Conservatism is founded on greed, selfishness, gluttony, hate, meanness
    among other evil concepts. Caring more about tax cuts for the rich than
    about little children who don’t have enough to eat IS a PERFECT example
    of how evil conservatism is.

    • smallergovnow

      If liberals care about children so much then why are they killing them by the millions thru abortion?

      • otter1111

        How true.

      • 2Gary2

        because they do not believe fetuses being aborted is killing obviously. Dumb question.

        • TtT Engine

          That is because we live in a Culture of Death/Moral Relativism/Loss of conscience. Christi Fidelis !

      • Gay Veteran

        why do you want to turn women into slaves?

        • TtT Engine

          Hurry up, radical Islam has got a big lead on you. They are real kind to homosexuals also. Christi Fidelis !

          • Gay Veteran

            I have to fear from “Christian” fundamentalists than radical Islam

          • Hammerstrike

            All you poofters have to fear is the WBC protesting your funderals after your lot croake of AIDS, cocaine overdose or from some sick sexual games, so crame it bugger-boy!

          • Gay Veteran

            lol, a proudly open bigot

    • TtT Engine

      Leftism has “invested” aka spent trillions of taxpayer dollars frauding the US Taxpayers all in the 40 year lie and failure of “social welfare”. We have more poverty, food stamps and social decay than ever before in our nation’s history. What we ended up with is Government obesity. You distort conservatism. True conservatism embraces God, the Ten Commandments and the Judaio-Christian value system. If you believe that is evil, you believe God is evil. Leftists live in a dangerous and upside down utopia. You lefties have been at this for 44+ years. When does common sense intervene or is this plan a disguised doomsday machine ? Christi Fidelis !

      • otter1111

        Nice post.

      • Gay Veteran

        “…We have more poverty, food stamps and social decay than ever before in our nation’s history….”
        you need to get a clue, we have more poverty because MILLIONS of American jobs have been shipped overseas
        and if you want to live in a conservative country that really believes in god then move to Saudi Arabia

    • MichaelfromTheEconomicCollapse

      Gary did you check out my book yet?

      You might want to – there are a couple of surprises in there for you. :)

      Those that read the book know what I am talking about.

      Michael

      • 2Gary2

        Hi Michael–I have not had a chance to read your book. I will though. Congrats on your book–I am so happy for you :)

    • Robert (qslv)

      @ Gary: Sorry, can’t let you get away with this.
      Whether or not you believe in a being called Satan or regard the “devil”
      as forces of evil, socialism seems to be part of that evil force.
      Socialism is founded on greed, selfishness, gluttony, hate, meanness
      among other evil concepts. Caring more about about murdering little children who don’t have a chance for life than
      tax cuts for small business owners and the middle class IS a PERFECT example
      of how evil socialism is.
      P.S. Thanks for writing most of my post for me.

      • 2Gary2

        Thanks for copying my post and changing it. That must mean I am correct. Copy=flattery.

      • Gay Veteran

        I fixed your sentence: capitalism is founded on greed, selfishness, gluttony, hate, meanness
        among other evil concepts.
        as for murdering children, how many unwanted babies have YOU adopted? None? then STHU

    • Shmeggle Marxist

      liberalism and shmucks like you are the greatest danger to the USA. Conservatives donate more money than libs, is that selfishness? libs in the inner cities are fat slobs, you dems have a 200+ years history of racism, lmao at pieces of garbage like you

      • Gay Veteran

        clueless, “conservaties” and “libererals” are just 2 sides of the same coin, serving their corporate masters

  • Ralfine

    Actually, until 2010 Germany was the country that exported the most. And they exported more to South and East Europe than to China. (In case you are wondering, why those countries are so heavily in debt and why Germany is doing so well).

  • cchivers

    Exactly what I’ve been thinking for more than a year, even with Jim Rogers and Marc Faber denying the possibility. This could also account for all of the ghost cities they have built. They built them in readiness for the coming surge in business. I can’t believe any country would be so stupid as to continue building ghost cities no matter the reason.

    • Kenington

      There are no real ghost cities in China. What you have is massive scale construction to take advantage of economies of scale. Like all large infrastructure projects it takes time for the design capacity to be used up. The Cross channel tunnel between UK and Europe took more than a decade to be fully utilised.,

  • chris

    China not only will be the dominant economic power of the 21st century it will also become the dominant miitary power, eventually. This has been enabled by traitors in the US and West who have engineered this by design for profit and political reasons.

    • lazyIke

      Its called NFTA and WTO

  • pubpubpub

    Chinese

  • TtT Engine

    The suicide of the left began 08+15+1969. True evil use bombs and military weapons only as backup. The lethal weapon/civilization killer is much slower, but much more effective. They have destroyed us by effectively killing God and His Commandments, aborting billions of babies, corrupting minds and infiltrating our government and schools. Once they have destroyed our currency, we will have lived and witnessed the theft of the greatest nation ever created hijacked without even a single shot fired. Al Capone would have been amazed. We watch/wait as the Cicadas whirl like a martian ship. Colonel Allen West, “we may not have until 2016″. I pray God spares us until then. The death of the West ? What is/ will be our response ? Christi Fidelis !

    • Gay Veteran

      gee, your “god” was easily killed

  • TheFireWithin

    How long till America falls financially? That is the million dollar question…….How will America pay off all of her debt? Is there a possible scenario?

    the utter end….

  • Gary

    All China has to do is pull out of the dollar and tell the U.S. to hit the road, and the entire world would follow them.

    A dollar collapse will happen, it’s been waiting to happen for years. Right now, the lights still come on, and American Idol is still the center of attention. The U.S. is the TV saturated country in the world, most U.S. citizens don’t even know what Monsanto is, because the TV is not going to tell them.

    There is no way the U.S. can pay their debt back. They blew it when they went into the dollar and stopped using gold and silver as a currency. The banks are the real ones who run the world, no government is more powerful than the banks. Did you know peasants in third world countries are worth more than the average American citizen? It’s because those peasants don’t have trillions of dollars of debt tied around their necks.

  • Tatiana Covington

    Oswald Spengler foresaw China becoming dominant on Earth by 2400. He did it in 1916.
    I’d say 2100. And I’d add “and the other planets”.

  • Shmeggle Marxist

    LMAO

    • John Williams

      Seems to me women are largely responsible for keeping Progressives in power.

  • Kenington

    You are a nutcase. Seek some help.

    • John Nikson

      yeah,, send your mama with your nuts,,

      • Kenington

        Typical! Low class vulgarity. Wash your mouth with soap son and go and seek in the corner.

        • John Nikson

          Know how to wash your nuts first.
          this blog is intended for views of individual personals,, dont make it as battlefield,, by opposing other’s views,, every one has freedom to express their views,, where did you comes from, that low class china ?

          • Kenington

            Racist, ignorant, stupid pig. You have no view and nuts, just irrational hatred of people different from you and you need help.

  • cpgone

    Great article.
    FOR THE 897th time……………..
    Please put a simple share button like ZH does.
    I don’t do FB or Twitter.

  • John Williams

    All I know is the gold bugs have been preaching for years how you can’t go wrong buying gold. $2000, $3000, $5000 any day now……I fell for it and will probably end up just passing the coins on to my kids as novelty gifts. Had I invested it in the stock market it would have gained value. Call it fiat phony paper or whatever, it buys things. There is talk of gold going below $1000, and the slick talkers are at it again. Someday in the future (maybe what, 50 years?) gold will skyrocket.

    • das

      Timing is everything. How did your stocks do in 2008? Gold should be looked at as a storage of wealth, just like dollars in you bank account. Those dollars are losing buying power every year. Feel free to pass those “novelty gifts to me, since they are worthless to you.

      • John Williams

        I exited the stock market (401k and personal stocks) in 2007 because I listened to the few and lost zero. However, I also listened to the few and bought gold in 2009 instead of getting back in the stock market, although did to a lesser degree with my 401k. .

        As gold drops it too is losing purchasing power, but you can’t buy anything with gold to begin with! However, stocks went up and I would have many more dollars which does buy things like food, ammo, land, farm equipment etc. which will be much more valuable than gold when the SHTF. Recently I “sold in May and walked away” (actually in April) and went back into safe mode with my 401k, and its looking like that was a good decision.

  • Blackhawk

    John I see your point, but you’re very disoriented. You think you have a choice between an evil and a less evil and there is no alternative. Have you thought that someone else wants you to think like this?
    There are infinite possibilities why would you get stuck with only two?
    Think up for yourself, question authority.

  • TT

    Shure, thats why they are rigging the BIGGEST REALESTATE BUBBLE ever seen

  • Covington

    Gold and barter are the same. The paper price of gold will cease to exsist and when that happens the physical price will rise significantly. The new monetary system will be a gold backed barter system. All the gold backing will be handled by the “Brics” development bank. This will also mean the end of the dollar. Countries holding dollars in reserves I.E. US Tbonds will be recycling them through the brics bank. They will be returned to sender as they are exchanged for energy, food etc.
    All of this will have the Fed and its Weimar printing presses in a dither as they will be overwhelmed.

    The channels are set up to get rid of US T bonds and its checkmate for the US dollar.

  • Inhuman

    China’s government has also been pushing Bitcoin as well, which already has surpassed the US in active Bitcoin clients. The Yuan is a dying currency as well just like the Dollar, switching from one dying reserve currency to another will solve nothing.

  • Tatiana Covington

    The real reasons fiat money always fails are:

    First, it’s paper money and paper is mostly carbon: the 4th most abundant element in the universe. Therefore, scarcity does not exist for it and one can produce as much paper money as one wants.

    Second, it’s just as easy to print a $100 as a $1. Or a $1 million. Or even a $100 billion. Remember Zimbabwe. Or Weimar.

    Paper money is not self-limiting by the scarcity of any element. Gold and silver money is so limited.

    It all comes down to nucleosynthesis.

  • Hammerstrike

    Not in China.

  • Hammerstrike

    It isn´t evil to treat scum like scum.

    China is interested on those who can contribute to this world, not in those who are a drain to it, like you.

  • Hammerstrike

    “My God has a hammer, yours was nailed on a cross, any questions?”

  • cw

    This article is ignoring some important issues. One is that because China lacks the same clearing mechanisms and bond market that the US has, it could not be a the default world currency, at least not yet or for years to come. Secondly, do you know anyone who trusts China’s numbers? If you think the U.S. fudges their numbers, you are in for a world of pain with the Chinese. This is a corrupt kleptocracy by its very definition we’re talking about here. Who knows if the Chinese have the gold or not. The same can be said for the U.S., but then again the U.S. has a system in place where the Chinese do not.

  • Max

    if this does occur can we then do to them what they did to us? peg to dollar to yuan @ 1:8

  • DaveZiffer

    Mr. Nussbaum: in answer to your question: the Chinese themselves would start buying all those goods and enjoying them domestically, rather than shipping them over here are artificially reduced prices for us to enjoy.

  • DeathBreath

    “If China does decide to back the yuan with gold… forget about cheap gasoline or cheap Chinese imports.”

    China has fueled its growth with cheap exports by pegging the yuan to the dollar to maintain a favorable exchange rate. They own over $1 trillion in US treasuries because of the huge trade surplus. If USDCNY does plunge, so will exports, the value of all currently-owned treasuries and the overall Chinese economy.

    It is highly unlikely (at best) that the same PBOC that has been strategically devaluing the yuan for years would suddenly decide that an honest, gold-backed currency is advantageous.

  • Karl

    No one cares! Our corrupt government needs to be eliminated!

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