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19.03.2014 admin
This decision, if taken, may lead to huge volatility in foreign exchange markets, a depreciating dollar and ultimately an international monetary crisis. John Butler in his book ‘Golden Revolution’ and Jim Rickards in his book ‘Currency Wars’ have warned that China and or Russia could move to back their currencies with gold which would then lead to the U.S. According to media reports, the People’s Bank of China is considering phasing out the dollar as the reference currency or peg for the yuan, and to start using gold as the reference point. Newcrest Mining, the world’s number three producer, is forecasting no changes in its gold output from last year but said it has to cut operating costs.
Beijing’s possible move to back the yuan with gold would be a strategic move in order to, lessen the risk of inflation, increase the yuan’s attractiveness as an investment medium and  create faith in the yuan as a reserve currency.
It would be a strategic gamble and while it would cause much short term economic pain for China and indeed the world – it could lead to long term benefits.


The Chinese authorities have been pushing for a more international role for their currency and as an alternate reserve currency to the embattled dollar and euro. With gold now traded in yuan, it appears to be only a matter of time before oil is traded in yuan thereby positioning the yuan as ‘petro yuan’ and a rival to the petrodollar as the global reserve currency.
China had announced from multiple government sources over the last 5 years that 2016 is the target date for trading their currency as reserve currency.
A second implication of this I would bet will be the removal of the partition between remimbi as internal currency and yuan as international currency.
The Chinese currency is RMB (Renminbi) which translates to People’s Money, while the units are Yuan and Fen (equivalent to Dollar and Cent, Peso and Centavo, etc). Indeed the Bundesbank recently admitted that the yuan was becoming a global reserve currency.


I grew up in the Far East where the local currency is not acceptable outside the country, and when foreign travel is involved, it is necessary to acquire the foreign currency needed for international monetary usage = The US Dollar (USD). As I see it, a global currency reset and the new Global Trade Credit will have to happen In Tandem.
The collapse will require a Total Reset, which will then result in a New Global Trade Credit for Trans National Trade, while each nation can keep its local currency for internal use.



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