China to ‘Kill US Dollar’ With Its Hidden Gold Reserves?
The comments below are an edited and abridged synopsis of an article by Jacob Nelly
No one knows if China definitely has the reported 20,000 tons of gold in reserves. But if it has, China can take on the dollar by using gold for international trade. The trade war would then take a different tone, and sanctions founded on geopolitical issues would have less effect.
China’s economy is currently strained by the tariff war with the US; its main stock indexes fell on signs that it will see anemic growth and an escalation of the tariff war.
With both countries targeting more of each other’s goods, global trade could soon feel the negative effect. However, China can hit back at the US through the greenback.
China has nursed the ambition to create an alternative to the US dollar as the currency for cross-border trade. It could make this happen, at least inside the Asia region, through gold.
Beijing has been accumulating gold for a long time with a view to backing up the renminbi. China has much more gold than the official figure of 1,842 tons; current estimates are around 20,000 tons.
If China begins to back the yuan with its gold reserves, it could kill the US dollar.
As well, China launched its yuan-denominated oil futures contract in March, prompting some analysts to predict the emergence of the petroyuan as an alternative to the petrodollar.
Russia accelerated its bullion buying about a decade ago, but bear in mind that Moscow will have to battle against dollar dominance at some point.
