internationally yours ;o)
- China’s central bank is buying huge quantities of gold.
- China wants the yuan to become a reserve currency, but does not want a “strong yuan”.
China wants the leverage to control all currency values, which requires control of the gold market.
Once China has enough gold, it will bid up the yuan-denominated price into the stratosphere. Once it does that, there are only three choices. First, maintain credibility and the reserve currency status by refusing to change the price of US dollar denominated gold. If it does that, domestic industries will be crippled by Chinese competition, because the yuan will become very cheap in relation to the dollar. Second, allow the dollar denominated price of gold to skyrocket in synch with the yuan denominated price. That will end the US dollar’s reserve currency status. Third, kow-tow to Beijing, seeking a seal of approval from China for any serious financial…
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