"China Yuan Gold Fix Is Part Of A Planned Shift From Dollar": China's Bocom

Tyler Durden's picture

China's shift to an official local-currency-based gold fixing is "the culmination of a two-year plan to move away from a US-centric monetary system," according to Bocom strategist Hao Hong. In an insightfully honest Bloomberg TV interview, Hong admits that "by trading physical gold in renminbi, China is slowly chipping away at the dominance of US dollars." Gold, silver, and petroleum "are the three USD-based commodites that China wants most control of" according to Hong but "gold in particular is one of the commodities that China is hoarding very hard."

 

Finally, as Hong explains above, for those who suggest that China will never dump Treasuries or 'hurt' the dollar, since they hold so much dollars on their balance sheet, things are chganging rapidly - "The gold reserve on the China balance sheet has almost doubled since 2009. By holding gold, and moving away from a US-dollar centric system, we actually require less US dollars."

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Bill of Rights's picture

Thats been the plan all along...Aww you know " Fundamentally changing America " you voted for it, well you got it suckers.

Dicey's picture

Get a gold backed account with BitGold and spread out your gold exposure risk globally.

Don't keep all of your gold in your own country so it can all be confiscated by your government in one go. Don't buy into this nonsense that if it isn't in your hand then you don't own it, as CIA man Jim Rickards tells you, which actually just makes it easy for your government to steal it all. Is that why CIA man Jim Rickards tells you to keep all your gold in your own country?

Open a free bitgold account, buy gold by depositing money and pick which vault you want it stored in from numerous vaults around the world. Store your gold in different vaults too. Then pick up a BitGold prepaid Mastercard so you can spend your money in your BitGold account as normal. If your currency collapses you've still got your gold. When the price of gold goes up, as it's doing, so does the value of your BitGold account. You can choose to take receipt of your gold whenever you want to. This is a much safer way to hold your money in an account than a traditional bank where bail-ins (stealing your deposits) has already occurred in several places in the world and will occur everywhere one day. The banks are bankrupt, only rampant criminality by banks and governments is keeping the system going...for now. Protect yourself and your family and get a bitgold account. It's a no brainer.

LawsofPhysics's picture

Store your own gold in your own vault. Yes, it really is a "no brainer".

 

Troy Ounce's picture

 

 

It is all about trust.

And we trust China, no?

<crickets>

Taylor's picture
Taylor (not verified) Troy Ounce Apr 20, 2016 2:08 PM

This is Donald Trump's most shocking statement yet,

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?!!

www.legitorscamreview.com/the-final-bubble

Joe Trader's picture

Is there a broker out there that lets you hold your balance in terms of gold - and give you USD margin to buy stocks? Someone..get on this now...

The Saint's picture
The Saint (not verified) Joe Trader Apr 20, 2016 3:39 PM

It's no secret that China has been trying to undercut the Dollar.  Trump is right that China has been taking advantage of us.  Nixon should have left them in their communist backwards state instead of leading them out of the wilderness decades ago.

We need to launch another "Buy American" campaign and sink those gooks while we still can.

Prophet of Rage's picture

For the record, the chinese are chinks, not gooks. Gooks are vietnamese....

Get it together you racist bastard.

PirateOfBaltimore's picture

While most of my gold is stored "locally" (nearby lake, ever since that boating accident), I did put a little in BitGold just to see how it worked and whether they would deliver.

 

Cashed out 1/2 oz and it shipped quickly.  Gold cube plus some silver maple leafs.

Ivanka2032's picture
Ivanka2032 (not verified) PirateOfBaltimore Apr 20, 2016 3:31 PM

On that note, it's not that hard to get cash on any 'normal' day from an ATM.

 

It's not the 'NORMAL' days that you need to be preparing for.

Dicey's picture

Oh yeah because the governement won't confiscate gold if it's in your own vault, no a confiscation order like that in 1933 doesn't cover your own vault [sarcasm mode off]. if you really think your own vault makes you safe from confiscation you're too dumb for words.

Dicey's picture

Oh yeah because the governement won't confiscate gold if it's in your own vault, no a confiscation order like that in 1933 doesn't cover your own vault [sarcasm mode off]. if you really think your own vault makes you safe from confiscation you're too dumb for words.

s2man's picture

How does the gov know what is in my vault, besides the first bit I didn't pay cash for?

Salsa Verde's picture

How about buy physical and never pay anybody a fee or service charge on the asset ever again?

Brokers just love it when you tell them their services are no longer needed :) 

lester1's picture

Comstock Mining, LODE is a hidden gem. They are sitting on 3.2 million ounces of gold resources on just 10% of their land Holdings in Nevada.

 

Massive potential !

spartan117's picture

Is that chart right?  It use to trade at $7000 per share?  Pre-split adjusted maybe?  Makes AIG's performance pale in comparison.  

Ivanka2032's picture
Ivanka2032 (not verified) spartan117 Apr 20, 2016 3:34 PM

Massive potential (to be 'nationalized' and/or all notes to be suddenly called in whenever TPTB decide dy want summa dat).

ZH Snob's picture

I hope one or several of our gold pundits stays on top of this new fix.  I would like to know immediately if there is a divergence between the SGE price and the comex price.

Mountainview's picture

The end is just arround the corner!

N0TaREALmerican's picture
N0TaREALmerican (not verified) Apr 20, 2016 12:55 PM

"Fix"?  Like in price fix?

LawsofPhysics's picture

Yes, but the question is, is this a shift an even less stable FIAT?

We all know the fucking oligarchs are the same!

pathosattrition's picture

Until China pegs the yuan to gold...

LawsofPhysics's picture

...and can no longer devalue when they want to?

 

LMFAO!!!

Winston Churchill's picture

They have the most experience with fiat, so they know the current yuan is unsustainable.

They have the productive assets and the gold.

Given that, whats the real plan ?

DogeCoin's picture

Agreed. There is no civilization or country on this Earth that has more experience with Fiat than China. Do not think the leaders of China don't understand the nature of the paper game, the Chinese were its' inventors. I think the end goal is simple, wrest financial power away from the US and the West and focus it back on China like it historically was.

Ivanka2032's picture
Ivanka2032 (not verified) DogeCoin Apr 20, 2016 3:42 PM

Yeah. Why, here we have a  recent foto of some of those shrewd Chinese that know everything about their past history.

 

https://static01.nyt.com/images/2016/04/08/world/vancouver-web3/vancouve...

 

& this guy (in the end), was taught everything important there is to know about 'fractional reserve'

http://wpmedia.news.nationalpost.com/2016/04/picture_of_mr-_gang_yuan.jp...

semperfi's picture

gold backed yuan on the way, and other gold backed currencies from many other countries

LawsofPhysics's picture

sure, and normalization of interest rates too, so long as we are being optimistic.

oak's picture

russia will be the next.

Joe Cool's picture

China could cause lots of problems for the money printers in the west...

I doubt they will do anything drastic...

Above all...They want to be "a popular kid" in the tree house club...

Winston Churchill's picture

With round eye barbarians ?

You sure about that ?

Haraklus's picture

The women, sure.  The men, not so much.

10mm's picture

So Jackson on the 20 going bye bye really won't matter.

The Saint's picture
The Saint (not verified) 10mm Apr 20, 2016 3:46 PM

Trump can fix that before it actually happens.  The revolt on that issue begins in 2017.

N0TaREALmerican's picture
N0TaREALmerican (not verified) Apr 20, 2016 1:08 PM
Atomizer's picture

Who cares. Jack Lew wants to replace Andrew Jackson with Aunt Jemima character. 

http://www.politico.com/story/2016/04/treasurys-lew-to-announce-hamilton...

Aunt Jemima ad, 1982

coast's picture

Didn't the west bomb countries in the middle east for...ah never mind

Consuelo's picture

In a world awash in volatility, greed and mistrust, why would the Chinese even need to 'back' their currency with gold...?

 

All they would need do, is to show the world - unequivocally, that they are by far & away, the largest Sovereign holders of physical gold on the planet, and watch as currency flows migrate towards them.   Of course that means a 'media event' or some sort of independent, outside audit to the global economy-at-large, but even the crafty Chinese are up for a bit of honesty when it means their ¥¥¥returns are 10-fold...

oak's picture

china must let the gold price go much higher, otherwise, she will lose the credibity. next, she will create a cny-based oil future along with russia to attack petrodollar.

Atomizer's picture

You have been cheating the petrodollar system jewboy. Your gravy train is over. 

gcjohns1971's picture

The aggressive fiat monetary and credit expansions underway in China are fundamentally incompatible with having a Gold Based currency there.

I realize this is an unpopular position.

But both cannot be true.

That there is massive and wild credit expansion in China, explicitly endorsed, enabled, and promoted by the Party Powers there is an incontrovertible fact.

While CB gold hoarding in China may serve to provide a monetary reserve that can displace the Dollar, it does absolutely nothing to change the nature of the monetary system that enables and promotes the Dollar and other debt-based fiat currencies like it.  Merely having Gold on the Asset sheet, and providing Gold convertibility for currency are as different as night and day.   A Gold-Backed currency is the latter, not the former.   As the Dollar, which still has the largest booked Gold Asset backing, shows very, very clearly.

On the contrary, Gold asset-backing for the Yuan signals nothing but a passing of the Fiat-guard from west to east.   And like everything in the East, if you like your debt-based fiat currency of no particular value, you will have much more of it in the East...because there are more people there.

Everyone need a crystal clear understanding, that when a government chooses to have a Gold Standard they are largely passing monetary control out of government hands.   If credit is expanded in such a nation, then their Gold will be drained, or they will default.  It is very simple. 

To believe that there will be a Gold standard in China is to believe they will in one step change all monetary and banking policies in China 180 degrees virtually overnight. To do that they will have to bankrupt every bank, and every industry in China because, simply, if the Yuan is Gold-Backed then those banks and industries' loans will be de facto payable in Gold, and there is no such amount of Gold on planet earth to cover so much credit.

Very simple.  

So your analysis of a Gold backed currency in China is a very simple political calculation:

Does the Government in China have monetary policies congruent with a Gold standard Yuan?

No they do not.

Does the Government in China have the intention and will to accept the monetary consequences of moving to a Gold standard, without first reforming their monetary and banking policies such that their industries and banks could exist with a Gold Standard?

No they do not.  There would be a revolution if they tried.  Everything done with fiat credit there in the last 20 years would be un-done in an instant.   Discretionary credit expansion of Gold Backed currencies is simply not possible, without either default or draining of the Gold. 

If a store gives you 5 credits for 5 grams of Gold, that you can spend at the store, and then later tells you that there will henceforth be 2 credits per gram - meaning the 5 grams you gave them will turn into 2.5 grams - then you ask for your gold back, or the store refuses (defaults).  It is that simple.

China most recently devalued their currency only a few weeks ago.  That means everyone who had a debt in Yuan, just got richer because they will need to repay less in terms of real stuff. And it means that everyone owed a debt in Yuan just got poorer, because the debts they are owed became less in terms of real stuff.   Gold is real stuff.   That policy action is not compatible with having a Gold Standard currency, emerging or otherwise. 

conraddobler's picture

I gave you an upvote but don't look for anymore people really don't understand the gold standard it's been too long since it was essentially around.

That's why we had to exit the gold standard it allows very little wiggle room in terms of what you can do and still remain on it.

That's the point I think for some that see it as a way to restrain the size of government as it's akin to having handcuffs on which given how badly they've run the fiat universe and how that tends to turn out I agree with.

I think China is playing a game that it's many moves behind in and I've tried to tell people that they should be careful not to overestimate China.

China has a problem they opened up free enterprise to a very limited extent to modernize the country but they can't now put that back into the bottle.

It's a very interesting situation actually and I'm fascinated by contemplating what they will do next as I don't see where they are and where they say they are going as being hospitable to each other.

If they were to try and convert over to a gold standard now they resulting financial implosion would resonate through time and space.  

You can't get down from a credit bubble of heretofore unimagined proportions by going onto a gold standard without the worst depression anyone could imagine.

It would be bad enough to have all the Chinese ruling elites chased to and fro across earth for eternity.

I guess you could do a reset and say we're done we've modernized now we want to play the monetary stability card but in a population that size with global fiat surrounding you and a reputation as someone who will confiscate wealth at a whim I am at a loss as to what they think they are doing.

No one is going to flock to China to give them money they many never get back it's a communist regime.

It's extremely odd and it belies a mountainous naivete in terms of how capital would want to flow.   It's as if they think that their centrally planned economy is the best idea and thus with a gold backed currency everyone will flock there but who would flock to a place where the rule of law is basically whatever we feel like this Tuesday?

PoasterToaster's picture
PoasterToaster (not verified) conraddobler Apr 20, 2016 3:11 PM

It would simply destroy the globalist central banking system of slavery, and free the people of the world.  There is nothing to fear from getting rid of fiat currencies and replacing them with gold. 

Only people who benefit from this system of theft fear change.  Which means their opinions don't count anymore.

Haraklus's picture

I could very easily see China, the Saudis, and Russia crowding the gold trade, dumping their dollars, and declaring gold their official reserves.  It wouldn't be a gold standard on a personal level, but it would effectively be a gold standard on an international level, especially if large banks and countries started lending to each other in it.  IIRC this is a premise of freegold.

OTOH, an actual gold backed currency would actually make debt repayment easier for a lot of countries at this point.  Right now, the only way to create more money is to create more debt.  That debt requires interest, which requires the creation of more money, and on it goes.  Once you get over a certain point there's not enough 'debt free money' to go around.

 

So, if they devalue their own currency in gold terms, then peg it to gold at that devalued level, then they can use their own gold to pay off their own debts and probably actually gain in credibility in the process.

 

I agree re: money never flowing there, though.  If anything, we've seen that now that the get rich quick ROI is gone, money wants to escape that place desperately.  I've certainly got no interest in investing there.

lasvegaspersona's picture

If gold is revalued (a lot) higher then any loss of value through the lower pricing of Treasuries could be more than compensated for.

If gold is at $50,000 per ounce then all the 'wealth' held and represented by those bonds is captured by gold.

Gold is gold, paper is paper.

The Chinese are not stupid. When you hold over a trillion in treasuries you are sure to ask yourself at some point, exactly what it is that you have. The promise of Treasuries is the ability to change them into dollars and then be able to spend those dollars for real American goods and services. There is no way that can happen. The Chinese know this and the reason they buy Treasuries is to stabilize their currency. That will also be the reason they get rid of them.

Money, and even gold, is a tool. It is not wealth but rather a way to obtain the real things that are wealth.

All central banks can print currency. They know how to control the production to keep it from losing value. They can easily see when one of their own is getting loose with the creation of a medium of exchange. They all also know that gold is and always has been the one limiting constraining substance that keeps everyone in line.

To understand these bankers you have to learn to think like them. You need to understand their goals. Most of us would like huge piles of currency in front of us. Central banks already have that. They need to keep the world economy going. They need to keep the system that allows everyone keep working and producing the goods and services we all need and want. Things are changing now. The Chinese are looking to the future and planning for the day when Treasuries are no longer the prime reserve. They see the day when it is gold.

We should all spend some time and consider what that will mean.

LawsofPhysics's picture

The Chinese are not the only ones to "see" this. The question is, will they like NOT being able to freely manipulate their currency at will? This is the restriction that will come with a REAL gold standard.

In.Sip.ient's picture

No Politician likes that!

But... nobody has the mojo the

US had circa 1945-1982 going

forward, which means no one is going to

settle accounts in fiat currency. 

 

Translation, if you know your not going to

have a choice... best prepare in advance...

 

Besides, the "Yuan" can be gold based...

the Renmimbi... not so much...

 

Atomizer's picture

The fat pig discloses IMF workings. Listen closely.