Preparing for China’s gold standard
Recent moves by the Chinese state indicate that she expects a full-on dollar crisis and is moving to protect her own currency by linking it to gold.
China’s yuan has been rising against the US dollar. But it hardly begins to tell the real story. The Chinese state is bailing out of the dollar, buying almost anything just to get rid of them. And you don’t have to be the Brain of Beijing to understand why — the US’s disastrous campaign against Iran has badly backfired leading inevitably to an economic slump for all G7 nations, the bailouts of which will destroy the values of their currencies starting with the US dollar.
China sees this writing on the wall and is moving to save herself and her trade partners from the consequences.
Introduction
There is a timeline of events which strongly suggests that China expects that the global dollar-based fiat currency regime is coming to an end. These developments are all about the dollar’s replacement, and securing the value of the as-yet fiat renminbi with a link to gold.
One concern of the Chinese authorities is that the transition should be smooth. Speculation in gold and silver is being shut down and hoarding physical gold through gold accumulation accounts is encouraged. These developments emerged only last week, and the major banks have been behind much of the buying. There has been some commentary in the western blogosphere, but it mostly misses the point.
The purpose of this article is to explain that China has been working to a plan, commencing with the appointment of the Peoples Bank (PBOC) in 1983 with exclusive control of national gold and silver accumulation and trading, alongside its foreign exchange dealing monopoly.
The timing of this article is triggered by events last week, which strongly suggest preparations are being made by China for the beginning of the end for the dollar. They include accelerating the establishment of Hong Kong as the world’s major gold and silver trading hub, replacing London and New York which being based on dollars will cease to function with the dollar’s collapse.
These are major developments, and the rest of this article examines the reasoning behind China’s actions, and the steps taken to ensure that China emerges safely from the end of the fiat currency era.
