China Gold Reserves May Back Yuan Internationalization

• This is interesting. A gold backed Chinese Yuan. We hear rumors of a gold backed GCC (Gulf Cooperative Council) currency called the Khaleeji earlier this year. Any gold backed currency will certainly garner more support than a ‘out of thin air’ fiat currency. The obvious question is: Does China have enough gold to do this? I doubt it. So, if they really intend to do so, they have to buy quite alot of gold. And gold price will rise significantly.
   
• Dow Jones News Wires reports :
    
  SHANGHAI (Dow Jones)–China’s gold reserves may serve as backing for the yuan as Beijing promotes its use overseas, said Zheng Lianghao, managing director of the World Gold Council’s Far East division, the Shanghai Securities News reported Monday.
   
  Zheng, who was speaking at a forum over the weekend, said increasing gold holdings would provide China with a useful hedge as the dollar faced the possibility of depreciation, according to the report.
   
  In late April, the official Xinhua News Agency quoted Hu Xiaolian, the head of China’s foreign exchange agency, as saying China’s gold reserves had risen 454 metric tons since 2003 to 1,054 tons. 
   
• See also :
   
  New Gulf currency ‘Khaleeji’ poised to be Gold backed – Another Nail in the USD Coffin?
  Single Regional Currencies – Gulf Cooperation Council and Latin America 

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