The whole article reads a little conspiratorial for my liking (found here) but does provide some good insight into the machinations of the global gold flows. Additionally, I would not be surprised if all nations were not 'planning' for a new gold standard. Planning in the same vein that the Pentagon has 'plans' for a shutdown of gulf stream in the Atlantic, an asteroid strike, or alien invasion.
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Yao Yudong, a member of the People's Bank of China's Monetary Policy
Committee, recently penned an article in the China Securities Journal,
in which he called for a new Bretton Woods system. This would help
stabilise the global exchange rates. By implication, he is calling for a
return to the gold standard.
Under the old Bretton Woods system, the US dollar was the global reserve currency, fixed to gold at US$35 per ounce. This is known as the gold standard system, based on which paper currencies were issued. But President Richard Nixon ended this gold standard in 1971 by floating the US dollar outright.
By doing so, the world moved into the fiat currency system - or paper money system. Ever since, the dollar has been printed out of thin air. But the US has also been able to guard the dollar as the world reserve currency. This fiat currency system has given rise to huge debts, an expansion of the banking system and financial markets, and has become the mother of all volatility.
Now China is attempting to challenge this fiat currency system. It is no secret that China would like to float the yuan to become an international reserve currency. But China will not bank on the fiat currency system to do so. It is now pegging its yuan to the US dollar tightly. When the timing is right, China will de-link the yuan from the US dollar and fix it to gold instead. This will have far-reaching implications for the global financial system, creating further dislocations and crisis on a global scale.
Also, China has been entering currency swap contracts with other countries to bypass the US dollar. It has currency swap agreements with Brazil, Russia, Iran, Australia and the UK, to name a few. This scheme is developing fast to supplant the dollar with the yuan.
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China continues to hoard gold en masse. In
June, China imported 104.6 tonnes from Hong Kong. That would bring
China's gold imports from Hong Kong to 1,160 tonnes since the beginning
of this year. Officially, China reports its total gold holdings at
around 1,000 tonnes. Yet speculation is widespread that it could be
holding somewhere between 7,000 to 10,000 tonnes, surpassing the United
States' 8,113 tonnes. China is apparently preparing to adopt an
impending gold standard.
Under the old Bretton Woods system, the US dollar was the global reserve currency, fixed to gold at US$35 per ounce. This is known as the gold standard system, based on which paper currencies were issued. But President Richard Nixon ended this gold standard in 1971 by floating the US dollar outright.
By doing so, the world moved into the fiat currency system - or paper money system. Ever since, the dollar has been printed out of thin air. But the US has also been able to guard the dollar as the world reserve currency. This fiat currency system has given rise to huge debts, an expansion of the banking system and financial markets, and has become the mother of all volatility.
Now China is attempting to challenge this fiat currency system. It is no secret that China would like to float the yuan to become an international reserve currency. But China will not bank on the fiat currency system to do so. It is now pegging its yuan to the US dollar tightly. When the timing is right, China will de-link the yuan from the US dollar and fix it to gold instead. This will have far-reaching implications for the global financial system, creating further dislocations and crisis on a global scale.
Also, China has been entering currency swap contracts with other countries to bypass the US dollar. It has currency swap agreements with Brazil, Russia, Iran, Australia and the UK, to name a few. This scheme is developing fast to supplant the dollar with the yuan.
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