Tag Archives: gold-backed yuan

Is The World About To Take A “Gold Shower?”

The 1944 Bretton Woods international monetary system as it has developed to the present is become, honestly said, the greatest hindrance to world peace and prosperity. Now China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over the world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it…Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

The above is an excerpt from William Engdahl’s essay, “Gold, Oil, Dollars, Russia and China.” The essay is a must-read if you want to understand how the dollar was cleverly forced on the world as the reserve currency and how it is about to be cleverly removed and replaced with a trade system that reintroduces gold into the global monetary system.

Unfortunately, the U.S. educational system presents a fraudulent account of world financial and economic history from Bretton Woods to present.  Fed on a steady educational diet of U.S. propaganda, anyone raised and educated in the U.S. will wake up one day to an economic cold shower and eventual poverty unless they’ve taken the steps necessary to protect their savings (if they have any).

Let’s face it, the entire western monetary system is basically a fraud. It is privately made and privately owned, with the entire international payment system being controlled by the FED – which is totally privately owned – and the BIS (Bank for International Settlement, in Basle, Switzerland – also called the central bank of centrals banks).from an interview with Peter Koenig, geopolitical analyst and a former staff-member of the World Bank

Without a doubt, the Russia-China led BRICS axis is working toward a “reset” of the U.S.-centric dollar reserve global currency system: “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

That quote was delivered by Putin at the annual BRICS summit in Xiamen, China.  I don’t know how Putin could have more plainly, yet diplomatically,  laid out the inevitable demise of the dollar’s status as the world’s sole reserve currency.

The news report from the Nikkei Asian Review of a gold-backed yuan oil futures contract to be traded in Shanghai was treated with predictable skepticism from the those who require an event to have already occurred in order to “see it.”

That report surfaced shortly after the BRICS summit in China.  I suspect China intentionally has made the world aware of its plan to roll out this contract eventually well ahead of the actual event.  China is imminently launching a yuan-denominated crude oil contract on the Shanghai Futures Exchange.  Please note, for anyone skeptical of this event, that  the announcement came from the vice chairman of the China Securities Regulatory Commission.  I suspect that once this contract is trading smoothly with a high level of liquidity, the next logical step would be to enable the users of this contract  to convert the yuan received for oil into gold.  The gold-backing would be an incentive “sweetener” to use this contract instead of dollar-settled futures contracts.

A gold-backed, yuan-denominated oil futures contract makes sense certainly from the perspective that Russia and China are already settling Russian energy sales to China in yuan.  They have also set up a mechanism by which Russia can convert the yuan received into gold.  Furthermore, the Central Banks of Russia and China combined, are  by far, the two largest buyers of gold in the world.  Why else would Russia/China accumulate a massive Central Bank gold reserve other than to eventually reintroduce gold as a currency stabilizer and a trade settlement “equalizer”  into the global monetary ?

Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia. – William Engdahl, ibid.

The consequences for America as a whole will be catastrophic. Currently the parabolic issuance of U.S. Treasury debt is funded primarily by a recycling of dollars used to settle the majority of global oil trades. Once a dollar-alternative for settling oil trades is established, the amount of dollars available to finance U.S. debt-fueled consumption will rapidly decline. But it’s the ability of the U.S. to issue debt unfettered right now that keeps the U.S. economic system from collapsing. The Fed’s printing press will be the only alternative to immediate collapse. History has shown us what the end of that pathway looks like. It’s far worse than waking up and stepping into an ice-cold shower.

The Daily Coin has published a fascinating interview with William Engdahl:   Gold, China and The Deep State.

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.

 

China Plans Yuan-Denominated Gold Fix

China, also the top producer of gold, 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.  (LINK)

I have suggested for over eight years that the eventual financial “reset” will involve China rolling up out a gold-backed currency. As the world’s largest importer/exporter, China would be in position to dictate a requirement that countries trading with China would be required to China’s new currency for trade settlement. This would establish China’s gold-backed yuan as the de facto global reserve currency.

Any country which issues a currency not backed by gold would see the value of its currency plummet. On the assumption that China would require a full audit of any country converting its currency into the new yuan, the U.S. would be forced to open the Fed’s gold vault for Chinese inspection. I think we all know how this exercise will end…

I thus believe that China’s plan to launch a yuan-denominated gold fix is the next step in the direction of a longer term grand plan to eventually launch this new gold-backed currency. And perhaps that explains this billboard, the photo of which was taken by Simon Black (James) of The Sovereign Man website:

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It’s almost as if China is taunting the U.S. with that billboard – especially given the use of gold coin instead of an “O” in the phrase “the world currency.” I’m sure China is well aware of the fact that the U.S. has at most a fraction of the 8100 tonnes of gold it reports on the Treasury balance sheet.

I think we all know that the dollar will eventually collapse. China’s introduction of a gold-backed yuan as the world’s reserve currency would be the catalyst that would trigger the collapse of the dollar and completely strip the U.S. of its global superpower status.