It was over a year ago that we reported on leaked US State Department internal cable from the Embassy in Beiging released by Wikileaks describing China’s plan to undermine the US Dollar hegemony by increasing China’s gold reserves. From 2003 to 2009 China increased their gold reserves from 600 tonnes to 1054 tonnes by converting roughly $11 billion of USD reserves to gold. That’s the last time any official numbers have come out of China, but between discrepancies in reported imports, domestic production, and the fact that China does not allow gold exports, it’s estimated they could increase its reserves to 5000 tonnes by 2013. According to the leaked cable this increase in China’s gold reserves was intended in part to strengthen the Chinese currency, the Renminbi, so that it can begin to replace the declining USD as the world reserve currency. But some recent rumblings indicate China may be launching a gold backed global currency. This story may belong in the TinFoil Tuesday category more than the Money Monday category, because the sites where I’m finding the story all track back to an article at BeforeItsNews.com which also contains Biblical prophecy concerning the Obama administration. According to them China has been recasting their gold reserves, currently in 12.4 kg (400 troy ounces) bars into smaller 1 kg (32 troy ounces) bars, to lay the foundation for a new gold backed global currency. Keep in mind, 1 kg is not a viable denomination for everyday commerce, but it could be used for a new banking reserve system if they were to issue notes backed by those bars. Even if the speculation and analysis from the story lack credibility, recasting smaller denominations means greater liquidity, even at the investment level. So, even if the end goal isn’t a gold backed currency, but merely a new banking reserve system, such a move could still dramatically shift global trade and banking away from the US Dollar. As an interesting side note, melting down and recasting the standard Good Delivery bars bought from London, New York, and Switzerland is probably the most certain way to audit the purity of the bars themselves. We reported recently that a number of 10 ounce bars filled with tungsten were discovered in New York after jewelers melted them down. Tungsten is almost the same weight as gold, but costs about a dollar an ounce. If China were to discover one of these 12.4 kg internationally traded bars of gold that had been salted with tungsten it could trigger a massive audit of the entire world’s gold reserves, and an investigation into whichever government or central bank at defrauded the market.
Source: China May Launch a Gold Currency
