China Maneuvers to Take Away US’ Dominant Reserve Currency Status

   

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“All warfare is based on deception.” – Sun Tzu, “The Art of War” (500 B.C.)

“The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world.” – Thailand Deputy Prime Minister Olarn Chaipravat in an interview with Bloomberg

“An international monetary system dominated by a single sovereign sovereign currency has intensified the concentration of risk and the spread of the crisis.” — People’s Bank of China (2009)

It should go without saying that China and Russia have designs to end the U.S. Dollar hegemony and debtism free ride. This is fundamental to understand and will be a game changer. The impacts on the standard of living of these players will be profound and especially negative for the U.S. How and in what manner this plays out is the question. I strongly believe that the answer lies in two parts: letting the U.S. put a noose around its own neck and then at the appropriate time, kicking the chair out from under it.

The first part of the operation is now advanced and is described below. The second part involves China and Russia preparing its relative currencies to be accepted in lieu of dollars. It means making the yuan and ruble at least equal to, if not superior to, American dollars in world trade. As you can imagine, the U.S. — a country with a debt-to-GDP ratio approaching 110% — can ill afford this sort of challenge to its status as a reserve currency.

China has already advanced the Yuan as a principal exchange currency by incorporating a series of deal with other countries. Such arrangements are hardly mentioned by U.S. financial media, but they are going on constantly. So far, the People’s Bank of China (PBOC) has signed nearly 2 trillion yuan worth of currency-swap deals with 20 countries and regions, including Hong Kong. Here’s a breakdown of happenings:

I suggest that the kicking the chair out from USD hegemony involves at least partially backing the Yuan, and Ruble for that matter, with gold. China’s reserve assets were 30.2% of the world total at the end of last year. How much of this is already in gold?

China is secretive about the number, I think it’s because it had some catching up to do and it’s incorporating Sun Tzu-style principles, namely deception. The last time China revealed its gold reserve levels was in 2009 at 1,054 tonnes, which caught the market by surprise.

Another reference point is that China’s foreign exchange reserve increased from $2.2 trillion in 2009 to $3.4 trillion today. During that period, U.S. dollar reserves held by China fell from 69% to 54%.  If only 10% of that $1.2 trillion increase went to gold, then let’s see … At an average price of $1,200, that would be nearly 3,000 tonnes, bringing China’s total gold holdings up to 4000 tonnes. Conventional wisdom would point to between 3,000 and 4,000 tonnes. The U.S. supposedly has 8,133 tonnes in its reserves. Russia has doubled its gold reserve in four years.

China’s mines produce an average of 350 tonnes per year. During the last four years, it has produced 1,400 tonnes. Certainly, its domestic production went toward its reserve. Production estimates for 2013 are 440 tonnes. It should be noted, however, that from 2002 to 2009 China had produced approximately 1800 metric tonnes of gold, which strongly suggests that its figure of 1,054 tonnes for 2009 is understated and deceptive, maybe by a factor of two to three times.

Between 2011 and 2012, imports into China via Hong Kong surged to a total of 950 tonnes. Some, but possibly the majority of this ended up in gold reservesFurthermore, no one talks about “illegal” gold imports smuggled into China, which may add to the total.

This year, the gold grab has reached entirely new levels, no doubt just one of the “unintended consequences” of the gold short attack in the paper “market.” In the first five months of this year, China imported more than what it did for all of 2011, or 525 tonnes.

Another incredible number is the volume of ounces transferred out of the London bullion market (LBMA) in May. That month alone it increased to 28.2 million ounces. To put that in perspective: 28.2 million troy ounces translates into 877 metric tonnes of gold. The amount of physical gold delivered year to date on the Shanghai Gold Exchange is 1,198 tonnes. Again, it’s much more than one would expect of the appetite of institutions, banks and individuals. The “Chinese granny” investor story is overplayed and may be a bit of a decoy. Much of this are PBoC and their proxies.

In 2009, a Chinese state council adviser known simply as “Ji” said that a team of experts from Shanghai and Beijing had set up a task force to consider expanding China’s gold reserves. Ji was quoted as saying, “We suggested that China’s gold reserves should reach 6,000 tons in the next three to five years and perhaps 10,000 tons in eight to 10 years.”

The numbers I’ve cited are consistent with China easily reaching the Ji gold holding of 6,000 tonnes this year. The kind of withdrawal numbers being reported out of the LBMA, Comex and gold ETFs (653 tonnes YTD) suggest that the PBOC through it’s proxy, the State Administration of Foreign Exchange (SAFE), is involved in a physical gold raid of such magnitude that the 6,000-tonne target has been left in the dust. The great gold sale has facilitated a push heading closer to 10,000 tonnes.

More importantly, as long as gold prices remain suppressed, China will continue to be a large-scale buyer. Perversely, if gold prices remain low, it will serve to accelerate the timeline for China to take down USD reserve currency hegemony. The U.S. can ill afford a China gold reserve buildup of 1,000 tonnes or more a year, let alone raid 2,000 tonnes and at cheap prices.

Meanwhile, China reportedly is progressing well on its ambitious plan to recast large gold bars into smaller, 1-kilogram bars on a massive scale. The big gold recast project points to the Chinese preparing for a new system of trade settlement. In the process, they are constructing a foundation for a new gold-supported monetary system that will give them advantages to their trade payments.

Finally, higher gold prices are necessary if the U.S. wants to curb China demand and prevent an emperor-wears-no-clothes scenario on the home front. You see, once yuan becomes a currency strongly backed by gold, the next logical step will be not just domestic but international pressure on the U.S. and others, like Germany, to lift the iron curtain and reveal whether the gold they have really exists. Then get ready for all hell to break loose.

Visitors, a subscription to WinterActionables.com is only $35 a quarter. If you are exploiting the current once-in-a-generation opportunities in precious metal stocks like I am, less than $12 a month is a bargain to have keen eyes on this sector, which is being absolutely neglected and barely followed. Previous write ups on my investment selections may be found by searching WinterActionables.com. Among my previous posts, you’ll find a few freebies but most require a subscription to access.

  • j.c.way

    2 trillion Chinese Juan is approximately 320 billion U.S.Dollars.

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  • Tim Taylor

    Meh. China has no clothes. And if they incite a trade war, they will feel the wrath of US policy. Western capitalism has created the China bubble. It could just as easily create its collapse. Remember, in western culture, private capital is subservient to the state. If there is ever comes a choice between state interests and those of private capital, the state will win out. In a trade war, China would be decimated. Backing a massively corrupt system with gold gives you what? Lipstick on a pig?

    China may HAVE to back its currency with gold to keep capital flight from occurring. That I could believe. Because their currency today is worthless. Soon, in the forex market, traders will demand more yuan for dollars in order for China to continue its peg they will have to oblige. That means their currency is headed lower without some intervention. Gold backing may ameliorate that crisis.

    • http://www.winteractionables.com/ Russ Winter

      I will say it again, no where in my article is there any claim that China has their act together. I have written about this at length on these pages. There is also this ethnocentric view that the China needs the US.

      But you are debating the wrong topics. This is all about the art of war, deception, geopolitics, and knocking the US off its shaky perch. The US owes China $1.3 trillion, not vice versa. Finally China is not interested in subsidizing the US’ military-surveillance apparatus by allowing the US to own the dominant reserve currency status challenged.

      • Tim Taylor

        The U.S. doesn’t owe China squat. That’s our debt denominated in our currency. There is no way China is going to start giving away gold to those who own its currency just to get out from under buying Treasuries. Under your scenario, China would slit its own throat. It won’t happen. You were wrong about gold and this is more of the same on the same topic. No disrespect intended but when you put yourself out there in the public forum with these kinds of analyses, you have to take the criticism. I’d bet all of the gold in China what you believe will happen, never will in the fashion you believe it will happen.

        • http://www.winteractionables.com/ Russ Winter

          You are arguing about something I never stated. China is not going to a strict gold standard , my quote was “involves at least partially backing the Yuan, and Ruble for that matter, with gold.” Then my article stated the strategy exactly: they are going to announce that they have more gold than the US and turn it into a currency voting contest to compete strongly as a reserve currency and mostly with their main trading partners. The US will lose big in this new arrangement.

          • Tim Taylor

            I’m not arguing with anyone. I’m simply stating observations about the flaw in your thinking. The concept of a reserve currency has one primary driver. That is, a massive navy used to enforce global trade under that currency. China doesn’t have that. Another dynamic needed is a highly liquid, transparent economic market. Fail again. Investors still remember the commies defaulted long ago and they realize China is a mess now. Fail again.

            Finally, having a world’s reserve currency requires participation. NO WESTERN nation including NZ, Australia, Japan, Europe or North America is EVER going to abandon the US for China. NEVER. Global trade settlement may certainly change but it won’t be the dollar being replaced by China. Private capital in all of those countries is united to some substantial degree by culture and by military and economic allegiances. That is the same private capital that has China by the balls.

            I’ll take this bet. I’ll be back when you are proven wrong. You are way out there. Wayyy out there.

            Once again, you can make up all you want in your head. That doesn’t mean it’s going to fit reality.

          • http://www.winteractionables.com/ Russ Winter

            All it would take to blow the US military (“massive Navy”) and debtism sistema out of the water would be a US Treasury no confidence statement in the middle of night from China.

            Countries spend millions of lives to try and inflect blows on their opponents and this would be bloodless. You act like taking some economic pain and losing a few hundred billion in bond portfolio loses for this significant benefit would be a none starter for China. That is flat out wrong. The price for taking down US hegemony would be cheap compared to war and conflict.

          • Tim Taylor

            Once again wrong. Britain, which also had the most powerful navy the world had ever seen up through the second world war, and also had the world’s reserve currency, defaulted on its external debts in 1933. That includes debts owed to the U.S. The pound rose throughout that crisis. Default didn’t have one iota of an impact on the pound as the world’s reserve currency. It was only after WWII that the US was able to extract that institution from Britain. How did they do so? Because now they had the strongest navy the world had ever seen. It was force that determined the dollar would replace the pound. Defaults, economic crises, etc, had zero impact on the pound.

            You don’t get it. China is a western capital sweatshop. That they are forced into buying Treasuries doe NOT give them any power. The power in this relationship is all on the side of the US. China is just like India 150 years ago. It is an economic colony that provides empire with what it wants at the price it wants.

          • http://www.winteractionables.com/ Russ Winter

            I do get it, as I see this conflict as very weak countries battling the other with all the tools at their disposal, some key ones that I have described in the article.

            As far as the US spilling it’s own blood with this “strong navy jingoism” you mention, I very much doubt the will to do so. A few thousand dead American sailors and airmen will have people in the streets. Fighting China (and North Korea) and “controlling sea lanes” would involve hundreds of thousands of casualties. This war will be economic.

          • http://www.winteractionables.com/ Russ Winter

            BTW, nobody can beat China’s Hell March.

          • DanJR

            Ah yes, a vastly oversized Army with little combat readiness. Reminiscent of the scenes from Cold War Russia.

            China is the “Great Red Dragon” from revelation 12:3. The Kings of the East who will build a road to Jerusalem.

            Is it any wonder to you guys that China aligns itself strategically with Pakistan, Iran, Russia, and not India?

            Yes, they want to challenge our supremacy, but I don’t any of you guys have actually lived in the “Middle Kingdom”. They call themselves the Middle Kingdom because they think they are the center of the Earth. The Mandate from Heaven.

            The Chinese are the most hubristic people I have ever met, which is in part due to their communistic 1 party ethnocentricity promoting nationalistic fervor. They actually truly think of their children as “dragon offspring”.

            It is great and everything that China is teaching America a lesson in how to behave and setting us back on the right path, but they care nothing for that; they are seeking global domination.

            A nation once isolationist for thousands of years, now turned imperialistic. It rapes the resources of the Earth from Africa and exploits their weak political structure.

            China steals $200 Billion in IP and highly sensitive military technology every year, according to Jon Huntsman, the former ambassador to China.

            Do your homework, their culture breeds contempt, pride, and hubris.

            Even at a young age, the Chinese are taught the 36 stratagems. A series of tactics and maneuvers meant to conquer your enemy in war. The best tactics in this set all involve deceit. Make no mistake, China uses deceit and lies; which is why any corporate 500 company that does business in China will lose a wealth of trade secrets and is foolish for moving any headquarters or office over there. We have decimated our own domestic job front at the cost of short-term profits.

            There is no doubt gold is going higher, but the continuous salvo of cheerful ignorance of China’s rise and what the consequences are when China tries to destroy America’s financial supremacy will mean for you is going to leave you utterly speechless.

          • http://www.winteractionables.com/ Russ Winter

            I don’t disagree with much of anything in your commentary. My posts say nothing about how wonderful China is. In fact in the past I write about quite the opposite.

            But fail to see what your remarks has to do with China attempting (with its reserve holdings) and gold purchases to knock a vulnerable US off the perch?

          • DanJR

            Russ,

            I don’t disagree with much of what you say either. My mission is to inform those that have not been to China. I have lived there and have 1st hand accounts.

            I think it is great that we are challenged. I hope China brings back the former glory of our competitive edge. The American innovation and outside the box type of thinking that we built our nation on.

            We are a nation founded on principles. Whether we like it or not, they are Judeo-Christian principles of thrift, hard-work, honesty, trust, intellect, reciprocity, and integrity. I don’t intend to brow beat anyone here or pretend I am holier than thou, I am just expressing what I know of our history compared to that of China.

            In fact if it weren’t for the current president, we might actually make it attractive for corporate 500 companies to come back to America if we lower the tax rate to something attractive and give them a break on the repatriation of funds held overseas.

            I am just completely appalled that we as a nation can go continue to support the dragon that wants to dearly devour our way of life and our freedoms.

            I have lived in China like I said before. Everyone thinks what Snowden revealed is just maniacal and downright tyrannical, which George Washington probably would not have 100% agreed with, but he would have thought of Snowden as a traitor; but the way they monitor in China is 10x more extreme than in America. If you post something contrary to the Governments desires, especially as a journalist, you are likely to end up in prison for 10 years. There are numerous examples if you google it.

            Honestly Russ, I hope your writing is a slap in the face to readers to wake up. I encourage you to keep writing and please remember my words one day when they try to implement a Global New World Order. There are scumbag sycophants inside America that wish for this new world order to happen as well (especially some corporate tycoons, CFR members like Fareed Zakaria, Clintonians and Obamanites).

            Thanks for waking us all up. Godspeed Russ.

          • Tim Taylor

            Who said anything about the US fighting a war? If China would refuse to buy our debt, we would just default. There would be no need for war on our end. We didn’t find Britain when they had the world’s reserve currency and defaulted on what they owed us. Btw, nationalism would skyrocket. Politicians in this country would have cover to do nearly anything. But war? I don’t even what you are talking about.

            I’m done posting here. I certainly don’t expect you to admit you are wrong. You have to save face. So, you’ll keep responding until you get the last word. Have at it. I’ll be back when there is something worth saying that actually happens in the real world on this topic. Not speculation and hyperbole.

          • http://www.winteractionables.com/ Russ Winter

            Your quote: “If China would refuse to buy our debt, we would just default. There would be no need for war on our end.”

            Really? Oh? They go on strike and US defaults? I believe it was you that said this about MY view, “You are way out there. Wayyy out there.”

          • loantech

            Tim,
            I am sure you are a sharp guy with ideas (and brain power) that may be better than mine and maybe others here. But I am glad you are leaving and I will tell you why. Many of us here are aware of Russ’s HUGE success in picking and profiting off of mining stocks in the past. We are here to see what Russ is thinking regarding mining stocks and what may drive gold which may drive the mining stocks. We can go to many message boards or blogs if we want to argue or engage in endless debate or read such debate.
            Russ, IMO, has proven himself over 99% of the other advice letter writers and bloggers as we are aware of his personal successes. IMO he puts up this blog not to profit but to help others make money. He has a paid service to be able to monitor and if he chooses to control the conversation and that is the format I hope he is shooting for. Russ can hold his own and may not even provide this service for the reasons I just stated but I for one do not want to follow an argument. Even if it is to my long term detriment financially I will choose to see what Russ has to say as he has proven to me over a ten year period to know and execute money making ideas in these markets much better than myself.
            Best of luck to you in your investing choices.
            tom

    • eah

      “The US owes China $1.3 trillion, not vice versa.”

      As the old saying goes: If you owe someone $100, you have a problem. If you owe them $10k, they have a problem. Or something like that. So I think here China has a problem.

  • http://www.winteractionables.com/ Russ Winter

    Pretium hits a new super high grade vein!

    http://finance.yahoo.com/news/pretium-resources-inc-discovery-cleopatra-090000109.html

    VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jul 23, 2013) – Pretium Resources Inc. (PVG.TO)(PVG) (“Pretivm”) is pleased to report the discovery of the Cleopatra Vein within the Valley of the Kings and additional underground drill results from the Valley of the Kings Bulk Sample Program (the “Program”) currently underway. (See Table 1 below for assays.)

    Selected drill highlights include:

    Hole VU-009 intersected 2,567 grams of gold per tonne uncut over 5.8 meters, including 9,200 grams of gold per tonne uncut over 0.5 meters, 7,180 grams of gold per tonne uncut over 0.5 meters, 10,500 grams of gold per tonne uncut over 0.5 meters and 1,765 grams of gold per tonne uncut over 0.5 meters;

    Hole VU-013 intersected 2,560 grams of gold per tonne uncut over 0.54 meters;

    Hole VU-023 intersected 1,405 grams of gold per tonne uncut over 0.5 meters;

    Hole VU-025 intersected 2,600 grams of gold per tonne uncut over 0.5 meters;

    Hole VU-032 intersected 4,030 grams of gold per tonne uncut over 0.5 meters; and

    Hole VU-053 intersected 27,000 grams of gold per tonne uncut over 0.5 meters.

  • http://www.winteractionables.com/ Russ Winter

    Looks like a great morning on the news front this time Pilot with a great step out hole at TV Tower.

    15.3 g/t gold over 45.2 metres at KCD target, TV Tower

    July 23, 2013
    New gold results extend continuity of high-grade gold mineralization in the northwestern portion of the gold zone

    VANCOUVER, B.C. – Pilot Gold Inc. (PLG – TSX) (“Pilot Gold” or the “Company”) is pleased to report that recent drilling focused on the northwestern portion of the 400-metre by 300-metre gold zone at the KCD target, TV Tower has returned 15.3 g/t gold over 45.2 metres in KCD-142, including an interval of 386 g/t gold over 1.5 metres.

    The intercept in KCD-142 is located approximately 120 metres north of KCD-50 (See Pilot Gold news release dated January 22, 2013 and titled Pilot Gold reports 227 g/t gold over 12.0 metres from metallic screen re-assay of TV Tower’s KCD-50). The high-grade interval in KCD-142 (386 g/t gold over 1.5 metres) is visually very similar to the high-grade interval in KCD-50, including the presence of visible gold in veins oriented nearly perpendicular to the core axis, suggesting that the intercept may represent approximately true thickness. The presence of this style and tenor of gold mineralization a significant distance from KCD-50, as well as other holes with high-grade intercepts along this trend, illustrates the excellent continuity of high-grade mineralization in this area.

    Recent highlights include:

    15.3 g/t gold over 45.2 metres in KCD-142, including

    2.6 g/t gold over 56.5 metres in KCD-141,

    1.5 g/t gold over 57.3 metres in KCD-143

    6.3 g/t gold over 9.0 metres in KCD-144,

    Holes KCD-141, KCD-143 and KCD-144 were fanned off a single site located 110 metres northwest of KCD-50 and were designed to infill a sparsely drilled area where the geological model predicted the presence of gold mineralization. Additional drilling to the north of this area is planned to extend this zone.

    “The current phase of drilling, focused on areas to the north and west of the original discovery, confirms the presence of high-grade gold mineralization extending into sparsely drilled areas predicted to host gold based on our geological model,” stated Dr. Moira Smith, Chief Geologist, Pilot Gold. “These exceptional drill results will allow us

  • http://www.winteractionables.com/ Russ Winter

    This turned out to be a nice one! Oromin and Teranga go with friendly takeover, and slight bump in shares from .5802 to .60.

    http://finance.yahoo.com/news/teranga-oromin-announce-friendly-transaction-032434834.html

    My original call on this one:

    http://winteractionables.com/?p=3994

  • James

    Bloomberg reports further curbs on gold imports.

  • http://www.winteractionables.com/ Russ Winter

    Want some facts about China’s plans…Read this…This is as CREDIBLE and CREDENTIALED as they come.

    Quote: Philippa Malmgren is an insider’s insider. She was Special Assistant to the President for Economic Policy on the National Economic Council. She was also a member of the President’s Working Group on Financial Markets, aka, the Plunge Protection Team. Her client list includes every elite corporate firm in the world. You don’t get much more insider than this.

    http://www.economicpolicyjournal.com…d-chinese.html

    From the article:

    Quote: The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyer of gold, mainly in large off market. They want the Yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue. The recent bilateral currency deals with Australia, France Russia and Singapore, and many others,reflect this desire to displace the USD as the world’s reserve currency. It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.

    ~Phillipa Malmgren

  • http://www.winteractionables.com/ Russ Winter

    Zero Hedge post on ultra crowded oil spec longs;

    http://www.zerohedge.com/node/476710

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  • crimson

    Just thinking out loud here, but I wonder if one of the reason’s for the gold smash was to punish Iran, Russia, and China — all of which have substantially hiked thir bullion holdings of late. If so the boys made a huge mistake.

  • http://www.winteractionables.com/ Russ Winter

    On China: No argument from me, and all the more reason for China to strongly back its system with gold.

    Calling the US debtism system “the premier safe haven” is what is extraordinarily naive. You also seem to forget that the US is the debtor to China, not vice versa. All it would take is one statement out of China and the backing for your precious “hegemony” would come crashing down.

    • DanJR

      It is interesting that people forget the extreme debt that China is in as well. The crashing GDP numbers only hide half of the story. The other half is their immense off balance sheet debts like WMPs, local government loans, and their copper carry-trade. China will be in excess of 240% debt to GDP according to GoldmanSachs by the end of 2013 when accounting for these off-balance sheet vehicles.

      Just look at the innumerable empty cities that were fueled by their $1 Trillion (in USD value) stimulus programs in 2009. They are just as much a fool as we are.

      But, if people want to continue to hail the death of America, instead of speaking about prudent solutions, then so be it.

  • eah

    “whether the gold they claim backs their currency”

    Do you seriously believe any of the countries you mention — “the U.S. and others, like Germany” — claim their currency is backed by gold? Germany uses the euro (at the moment, who knows if that will be true eg five years from now), and there is no way they have or would ever claim it is backed by gold. Certainly the US makes no such claim re the dollar. Who are the “others” you speak of? Could you please be more specific there?

    And BTW, why hasn’t my last comment appeared yet?

    • http://www.winteractionables.com/ Russ Winter

      If you actually read my post, I suggest that the US has already hung itself as the dominant reserve currency. Gold is merely a facilitator of this process, and bit of a truth serum. After China reveals their gold stash, it will become a voting machine for other countries to determine whether to hold US Dollars or Yuan as a reserve.

  • cuemaster

    1. why are us central banks gifting the gold it sole from the american people in the early part of the last century in return for worthless paper?
    2.once its gone to red china its never coming back, and with it will go everything that holds up the american economy and thats the reserve currency status.

    • eah

      “…and with it will go everything that holds up the american economy and thats the reserve currency status.”

      Do you seriously believe that? Do you believe that gold is ‘everything that holds up the american economy and thats the reserver currency status’?

      FYI: Gold has nothing to do with the dollar’s status as ‘reserve currency’. The US doesn’t claim the dollar is backed by gold.

      The ‘reserve currency’ status of the USD is based on a) the political and military hegemony of the US (and no nation threatens that), and b) the fact the US is seen as the ultimate ‘safe haven’, where the rule of law and an independent judiciary protect property and investor rights.

      No one would ever mistake China, which is communist dictatorship, for a country where the rule of law reigns; where a truly independent judiciary is there to protect property and investor rights.

      As I said before: China can buy all the gold it wants. But it will simply never be seen as a ‘safe haven’. And therefore its currency will not replace the USD as a ‘reserve currency’.

      • http://www.winteractionables.com/ Russ Winter

        This video is for anybody foolish enough to suggest the US is a safe haven, strong country.

        Detroit in Ruins:

      • eah

        Note: ‘safe haven’ = protection of property rights / investments via the rule of law and courts, ie an independent judiciary. These are things China, as a one party communist dictatorship, does not offer — not really. This is why China is not now seen, and will never be seen, as a ‘safe haven’. No matter how much gold they buy.
        I hope it is clear now.
        In that, Detroit is entirely irrelevant. Sheesh. Am I to take your reply seriously?
        While I do agree the US economy has BIG problems, as someone once said ‘rumors of its demise are premature’. And this includes its status as the world’s premiere safe haven, as well as the status of the USD as the world’s most important ‘reserve currency’.

        • http://www.winteractionables.com/ Russ Winter

          I think you are trying to jerk my chain, as you’d have to be drinking some very spiked Kool Aid to believe Detroit is just some insignificant outlier. It is symptomatic . 1/2 the country has no money or wealth at all, that’s your tax base.

      • cuemaster

        one of us perceives reality correctly.

  • eah

    China is a communist dictatorship. There is no true separation of state and judiciary. No one would see China as a ‘safe haven’ — somewhere with strong courts to protect property rights, and a government that will respect and carry out court decisions. Just look at the numerous ‘reverse merger’ frauds and what the Chinese authorities have done in response — ie nothing.

    The dollar is the world’s ‘reserve currency’ because the US is the world’s premier ‘safe haven’ — where investors can rely on courts of law to protect them.

    No matter how much Au they buy, China will never replace the US in this respect. Never. And to think otherwise is extraordinarily naive.

  • loantech

    Russ are there some concentrated sellers on CPN for any reason you can see? Always a lot more available on the sell side it seems and the stock though dong fine today has had trouble gaining traction?
    CIBC, Merril and Raymond James large sellers this past month.

    • http://www.winteractionables.com/ Russ Winter

      I think it is under the radar. Plus the market is constantly spooked every time someone starts production or gets near commissioning. The Colossus news didn’t help.

  • Jay H

    Gold just spiked $5 on heavy volume in the 10 minutes before the London PM fix. Together with the negative GOFO, that kind of action suggests there is not enough physical gold in London to meet withdrawals from the LBMA system. This is more than paper shorts covering in the futures market.