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China Makes Move To Collapse U.S. Dollar: Announces Gold Back Currency For Global Trade

Monday, January 28, 2013 11:35

The People’s Bank of China has already reduced its holdings of US treasuries below those of Japan and last announced a change in its gold reserves in 2009 when it declared a 76 per cent hike to 1,054 tonnes. Germany, Italy, France and the US keep more than 70 per cent of their reserves in gold, the last bulwark against the devaluation of money printing.

According to the article, China is recasting all of their gold reserves into small one kilo bars in order to issue a new “gold-backed” currency. Many say this will disrupt global trade and will eventually cause a collapse of the US dollar.

There can be no doubt that the US dollar will soon be history. China is recasting all of their gold reserves into small one kilo bars in order to issue a new ‘gold backed’ global currency. This is surely a strategic part of their recent push to sign new trade agreements with Russia, Japan, Chile, Brazil, India, and Iran. The cat is now out of the bag, the US will be given the ‘bums rush’ by the largest trading nations in the world and the dollar will go down in flames. GATA now estimates that 80% of the gold that investors believe they have in allocated accounts is long gone, the majority of it probably wound up in China.

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Seems as though they are getting pretty arrogant and being egged on by all their corrupt and rich civil servants and military officers. Just waiting for them to use al their newly established military might abroad. They will not be able to withstand the temptation lol


The can't get off the petro-dollar because of oil dominance.

The US occupies the countries with the cheapest oil productions. They forces other countries therefore to convert their currencies to dollars for trading oil.

This is how the US controls the world, and why investing så heavily in the military. US will not let go of the oil reserves with out a war.

Please see these two lectures.

Dude! There are no reserves!


Just look at that table. The banks don't even hold paper and you think there is gold backing any of the paper.

Official gold holdings:
1,054.1 tonnes
Percent of foreign reserves in gold:
1.7 percent

Official gold holdings:
8,133.5 tonnes
Percent of foreign reserves in gold:
76.3 percent
The U.S. had its largest gold reserves in volume terms in 1952, when reserves totaled 20,663 tonnes. Holdings first fell below the 10K mark in 1968.

One tonne is equal to 32,150.722 troy ounces.
664330368.686 ounces

$1700. per ounce

7,700 billion us dollars True money supply

7.7 trillion/664330368.686=11590.61$/oz.

7.7 trillion/1700=4529411764.71oz



Yep they only have about 15% of the gold they need to back currency

or 11590/1700=7 so the price of gold would have to increase 7 fold to back the current TMS.

does this work?

Cyril's picture

Well, yes. It does. ;)

Well, yes. It does. ;)

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

If we go "belly up"

then who is going to buy all of China's exports? Answer: Nobody

China doesn't need millions of unemployed, hungry, angry citizens.

Therefore, China needs a good U.S. economy. For now. That may change in 10 years or so.

China would prefer to use the cheap dollars...or FRN's to buy up America one asset at a time. A U.S. collapse is bad for everyone.

Got Mises?

China does not benefit from employing its captive workforce to pile up worthless computer-ledger entries of FRN from the US. China does not need to export anything. There are billions of customers right there in China.

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

A 76% hike is not the same thing as a hike TO 76%.

I call bogus on this article.

China has no where near 76% of its reserves in gold.

Let's say China makes that move. It won't kill the dollar.

Here's why:

The dollar is NOT the world's reserve currency.

The U.S.A. isn't using the dollar even. We abandoned it over a slow period from the 1850's till 1965. "Officially" one could say we abandoned it in 1873 and the rest was just time for it to completely work itself out.

Now, what the U.S.A. and the world HAS been using recently is what are known as Federal Reserve Notes. They are mere pieces of paper - a banker's promise which isn't worth the paper it's written on.

THAT is what is the "reserve currency" of the world - nothing but banker paper.

This is a very dangerous thing to do and as we well know, it cannot be sustained for much longer.

The solution is simple - return to using the dollar as our currency.

A Chinese "gold backed" piece of paper will never displace the dollar in the market and gold cannot compete with a silver currency.


Because gold is too impractical for every day purchases.

Most of it is in the hands of the elites anyway.

But the elites aren't the ones conducting 99.99999999999% of all transactions.

The common man does that. And silver with its more convenient relative value for size, is the currency most suited to every day transactions.

No, gold will never replace silver. Neither will gold-backed paper.

But it very well may displace the un-backed banker paper used by the U.S.A. and the rest of the world.

Cyril's picture

What you say is fairly correct (if not entirely)

What you say is fairly correct (if not entirely) from my point of view.

On your last two lines, I would only add:

... unless they find their way (no matter how, just being hypothetical on the end result) to get more gold and silver reserves than any other country.

I still haven't seen all the German gold, nor the British. As for France, I know we even bragged about selling hundreds of tons of it in 2004/2005, while our reserves weren't that much:


(INSANE. I know.)

China has a central bank emitting the fiat thing, which, observably, is always a bad idea on the long term. It always ends the same, the destruction trigger events only happen to vary in kinds:


However they give me also the impression to have understood that actual gold reserves might not be a bad idea at all, on the other hand, eventually & "just in case".

I'm really not a fan of China (to say the least) but ironically enough they seem among the very few (countries) left with a minimum amount of practical common sense, as mind boggling as that may be.

Maybe we're ALSO witnessing the INTELLECTUAL DECAY of the entire western civilization, btw. I've been thinking about that lately.

An event exclusivity for us all that I'd have been much happier to miss COMPLETELY.

"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Will they be allowed to collapse the dollar?

A lot of people around the world have a great deal invested in the continuance of our fiat, it seems unlikely to me that such an action would go by without reprisal.


Have those in charge decided to let the inevitable happen and allow the dollar to collapse, weakening the US and preparing it to accept UN 'peace keeping' troops and the like?

Tu ne cede malis sed contra audentior ito

Gadaffi tried it in Libya.

Gadaffi tried it in Libya. Hussein tried it in Iraq.

Is this China's way of announcing they want a war?

As if the United States military hasn't been preparing for this for the past 65 years.

He who has the gold doesn't matter in the 21st Century, who does matter is he who controls the digital 0's and 1's, and the media.

In China's case in particular, they can't eat gold, and they're about 45 years behind in terms of technology compared to the West.

China purchased a lot of US debt, and now we're going to pay them back....

Never be afraid to ask simple questions.

You can't make a comparison

with Libya and Iraq to China. You're talking about a superpower that's allies with another superpower (Russia).

You are minimalizing their influence and power by quite a bit, my friend.

Nonsense. A well placed EMP, which China has in development

would erase all of those 0's and 1's in a flash.

Or at least make them effectively useless.

And the too often repeated phrase "you can't eat gold" is just asinine. Please stop. You can't eat 0's and 1's either genius.

Eating Gold

What's funny is we actually can and do eat gold on super expensive cakes and such. I love that last line though " You can't eat 0's and 1's either genius." lmao

"You can't eat 0's and 1's

"You can't eat 0's and 1's either genius."

Tell that to the 47 million Americans using EBT cards for food, genius.

Never be afraid to ask simple questions.

Then you counter your own point.

The EBT cards are a method of performing a transaction. They are not currency in themselves. There is a significant difference there. Similarly, a cheque is a method of performing a transaction, but the checque is not the currency itself.

Gold and Silver ARE money. They aren't just a means of conducting a transaction, they are a commodity with which you trade for another commodity (or service).

You could have an account, which you deposited gold or silver into, and which you use a plastic card to facilitate transactions with, where the title to the gold or silver you had, transfers to the person you are buying from. (E-Gold does exactly this)

You are using 0's and 1's not as currency, but as a means to account for your money.

The plastic card is not currency, it is a means to facilitate the transaction.

And despite all those distinctions, you prove my point that the phrase "you can't eat gold" is asinine, wrongheaded, and just plain stupid.

You don't aquire gold or silver in order to eat it any more than you acquire FRNs or accept a checque from your payroll department in order to eat THEM. You accept them, just as one would acquire gold and silver - so that you can use them to buy things including food.

Circular Story Links???

Follow the link to this story and you go to a story that links back to this story? Kind of questional?

HERE is a more "reputable" story on the subject:

"RMB on way to becoming global reserve currency: IMF official"

ON WAY to becoming reserve currency.

No official announcement about Gold (yet).
They ARE buying gold like mad and re-casting into kilo bars, but haven't announced their total actual holdings yet, still stacking.

Another link:

China wins the war with out

China wins the war with out firing a shot.


confirms China gold reserves at 1,054.1 tonnes of gold. That constitutes 1.8% of its central bank total foreign exchange reserves.

plug for Mish's blog

I have learned a lot on this subject and much more by being a daily reader of Mish's Global Economic Trend Analysis blog.

Here he points to a mathematical uncertainty regarding the issue and also China's pros and cons with stockpiling commodities.


Mish hasn't been right yet.

Mish hasn't been right yet.

Mish is a good writer and thinker and covers a lot of topics

Nobody is right all the time. Mish takes a stand and sticks with it and also owns up to his errors.

I read Mish and Denninger and others just to see what they say because it's important to hear many angles of a topic to get balance in your opinions and knowledge.

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

You aren't thinking this through

China traded its #1 problem -- hundreds of millions unemployed and living on the edge of starvation -- for our #1 and #2 assets: our technical knowledge and wealth (capital). They've known from the beginning that the USD was just a piece of bumf. They aren't playing for payoff of all US treasuries; if they quit the poker game right now they have won beyond their wildest initial dreams. They are stuck with a trillion of bad debt? So what? They now effectively OWN all the infrastructure and technological manufacturing capability which used to belong in the US and they now effectively OWN all the US technology.

The US "defaulting" will reveal the US as a criminal fraud, not able to buy anything on world markets for "cash" or credit and yet utterly at the mercy of foreign creditors for actual production, and vault the Chinese into likely receivership of global economic hegemony. And, of course, they can then -- most likely LEGALLY, and certainly morally -- take full ownership of all assets previously owned by US corporations and US citizens.

Fait accompli. And they didn't need to fire a shot.

Think it through. It's not that hard.

Bill of Rights /Amendment X: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Do you need a politician or judge to "interpret" those 28


I believe your analysis is correct.



I find this perspective interesting as it reveals a point of view on Chinese ambitions from more than 20 years ago:


I'm interested in what this means for the cultural competition.


Here's what Chinese propaganda tells us:


Bipolar vs. Co-dependence ;-)


"... the time is ripe to explore China’s future and its effect on the rest of the world."

The Sky's The Limit:


Precisely the reason that I own nothing

Except physical gold,silver and lead.

Cyril's picture



"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

I am no financial expert

but I don't see this as reasonable.
If china collapses our dollar - we could pay off our debt very easily. If the dollar has no percieved value, then we would just print 16 trillion and pay off the debt.
It would actually be like filing bankruptcy - would suck for a year or two - but in the long run we would be better off - we still have VAST natural resources so are not exactly a Greece, Spain etc, etc.

Of course, if your president was a complete ass and decided that paying off fake debt with faker money is bad taste and decided to trade our assets, well that could be a problem.
What are one of those really neat nuclear carriers worth anyways?
Maybe Alaska - hell they all hate Palin anyways.
I can see Barry doing that.

You fail to realize

They don't need or want our money. Try will take the loss as they take over the world leader status by not only backing their money with gold, but either crashing or formin a new deal with Saudi Arabia for a new Petro-Dollar, or should I say Petro-Yuan now backed by gold.

And you fail to realize my point

who cares?
Being king of the world has not exactly made for a great life here is case you haven't noticed. We live a geat lie. Perhaps being humbled on the world stage would bring some much needed humility to the masses.

And why do we care if the Petro Dollar is destroyed - that is a good thing - well, unless you are a relative of the Bush Cartel. We don't need foreign oil - TPTB use it so we can perpetuate wars. It is a known fact we have more reserves than Saudi Arabia.

I thought we all wanted the wars ended, the Fed ended. Seems China may be able to do more than we ever could to achieve those ends.