China To Launch A Yuan-Based Gold Fix By Year-End

China has been quite reserved about commenting on the extreme corruption and fraud which pervades the west hemisphere’s Governments, Central Banks and financial markets, especially as it regards the United States and its flagrant manipulation of the currency and precious metals markets.   But China has been quite active with diversifying its sources of revenues and foreign reserves out of the U.S. dollar and in to alternative currencies and hard assets.

Follow the money:  The Shanghai Gold Exchange has announced that it intends to roll-out a renminbi-denominated fix by the end of the year.  The plan is now being reviewed by the Central Bank (the PBoC) for approval:

Pan Gongsheng, a deputy governor of the People’s Bank of China (PBOC), said the bank would continue to support “speedy and healthy growth of the China gold market” and its internationalisation.

Here’s a link to the report:   China’s Yuan-denominated Gold Fix

RMB-world-currency-billboard

I find it quite interesting that China still has not released the highly anticipated update of its current gold reserves.   The blogosphere was rampant that this event would occur this month.

China has an interesting game-theory dilemma.  If it releases a report that shows its current reserves at or near the reported level of U.S. gold reserves (note:  emphasis on “reported”), it risks subverting its massive gold accumulation at current prices because such disclosure would likely cause a parabolic re-set in the global price of gold.

Quite frankly, given the catastrophic level of the paper gold “naked short” position held by the west’s Central Banks and bullion banks, a move like this would cause untenable disruption to global financial markets and commerce.

On the other hand, if China were to release a reserve report that was not significantly greater than its current reported gold reserve of 1,054 tonnes, it would risk losing credibility given the enormous amount of gold flowing into China and being withdrawn from the Shanghai Gold Exchange – not to mention the 400 tonnes of gold per year mined in China that goes completely unaccounted for.

My best guess is that China will continue to play hide and seek with its gold reserves until it feels comfortably hedged from the turmoil that will ensure once the truth is revealed.  This most catastrophic of which will be a collapse in the dollar and a collapse in the value of China’s Treasury holdings.  Please note that Russia is unloading Treasuries quickly in order to side-step this event.

As a former trader, I know that if I were holding China’s cards, I would accumulate a massive position in gold and a massive short in the dollar and then release the truth in shock and awe fashion.  The instantaneous transfer of wealth from the west to the east that will occur when this happens will be spectacular.

 

12 thoughts on “China To Launch A Yuan-Based Gold Fix By Year-End

  1. China has greatly benefited from the current system.They are long term planners and therefore IMO are not interested in shock and awe but a slow progression on a track of their choosing. One of the best interviews I have heard on the China gold story is from Macleod.
    http://www.tfmetalsreport.com/podcast/6877/a2a-alasdair-macleod-goldmoney

    I believe he is correct and china will announce gold holdings that strengthen their position in the SDR but not large enough to disrupt the current system because that course would benefit them the greatest

    1. I would tend to agree that China does not want to massively disrupt the current system. Only if war was imminent or had begun, would they do that, and that would be for keeps. Otherwise, what is the purpose of collapsing the house of cards – because they’re mightily pissed at us? The world doesn’t work that way. They don’t want the finger pointed at them, especially if all they have to do is buy gold and wait around until the financial system implodes of its own accord.

      Putin doesn’t want to pull the rug out either. He needs time to install his S-500’s and get the economy into higher gear, and stabilize alongside new Eurasian partners. Though China and Russia would like us to pay the price today, it is not in their best interest. They know how to string the situation along. It is we who are agitated and want to overthrow the apple cart as soon as possible.

    2. Yeah, you might be right. But what happens if the US refuses to let China enter the SDR? I saw this video with that Ken Hoffmann from Bloomberg TV who said: If US does not allow China entering the SDR then China will find ways (maybe they are forced to to do it) to back the YUAN with gold. China is on it’s path, and they will not allow criminal and corrupt governments in the West to stop it. The WEST had it’s time, it’s over!
      https://youtu.be/ofDSpTwa4gY

  2. Thanks for your blog. I check multiple times a day and I get excited when I see a new post. Question: When China reports the new gold holdings, why do you forecast it will send the gold price soaring and dollar lower? Don’t governments already know this so won’t be anything new? Won’t the distortion kick in for everyone else and the west will just dismiss it as a lie and not true? I am just naturally skeptical since there have been many events that should have led to higher prices, and with this, it just seems it is so easy to just sell it as a lie, ignore, and continue to manipulate the paper price. Thanks for your work. I am not sure when you find to do all this research, and the fact that it is a free service is very much appreciated!

    1. Thanks for the feedback. If you feel a desire to support my work, you try out a couple of my research reports.

      I said the price of gold would soar if China reports anything close to truth about their gold stash, which is likely larger than the US’s reported stash. It would “click” instantly with the world that a gold-backed yuan is the next currency. People would scramble to buy as mcuh physical gold as they can find.

      This who charade has to end sometime. Govts can’t print money forever. Either China will force a reset or the market will force a reset.

  3. China is a communist country bent on the destruction of democracy and freedom world wide. Ask yourself a question.

    Why does China support a criminal mass murdering North Korea?

    1. Tom, China may support a mass murderer, but the U.S. is a mass-murderer world wide. If you don’t have anything constructive to post about economics or the markets, take your American flag waving, China bashing bullshit to another blog. I wipe my ass with the American flag just like Bush, Clinton and Obama wipe their ass with the Constitution.

  4. How many pro-US anti-communist mass murdering tin-pot despots did the US support during the cold war? (Hint, more than one.)

    As far as nations are concerned, nobody but Nobody has clean hands, every nation has skeletons in their closets and they would prefer no one to notice or mention them.
    ——-

    Back to gold and China, you are right Dave, China will only tell the world what it wants the world to know. China keeps its mouth shut concerning how many Nuclear weapons it possesses, how many missiles it possesses, etc., why should gold be any different? Deng Xiaoping spelled out China’s plans quite clearly, “hide your strength, bide your time.” When the time is right (right for China) then they will tell the world how much gold China really has.

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