Shanghai: China gold consumption will exceeds 1000 tonnes for the year 2013, reaching 800 tonnes in the first half, state-owned China NationaL Gold.
Some question arises at this point :
- Why China is accumulation so much Gold?
- Does China wants to back Yuan with gold and turn it into global currency ?
- Does china want to replace U.S dollar with the Yuan as primary currency on the planet ?
The truth is that China doesn’t want to compete United States but wants to replace United States from the Dominance of Economic Power.
So what would happens if one day China says that they have backed yuan with gold and now they no longer need to use U.S dollar in international trade .
Previously China launched Gold Backed Global currency, by molding all their gold reserves into small kilo bars inorder to a new Gold Backed currency, causing collapse of U.S dollar & soon U.S dollar will be history.
Recently China & Russia building their Gold reserves. China has been notably relaxed about her own people acquiring gold, and the government itself appears to be absorbing all of China’s mine output. Russia is also building her official reserves from her own mine supply.
Further reason why Russia and China hoarding massive amounts of gold is to kill the petrodollar. (A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country) Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe. This has created an overwhelming demand for U.S. dollars and U.S. debt. But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade? The truth is that it doesn’t take a lot of imagination to figure that out. Demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before. So are Russia and China accumulating unprecedented amounts of gold right now.
China and Russia see themselves as having much in common: They are coordinating security, infrastructure projects and cross-border trade through the Shanghai Cooperation Organisation.
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.“