Saturday, 3 September 2011

China builds gold reserve to promote RMB and undermine US$

Wikileaks released this cable from the US embassy in China:
"China increases its gold reserves in order to kill two birds with one stone"  "The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China 's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries.The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Quoted in Zero Hedge

With China buying gold to support the RMB as a reserve currency, at some point the pension funds will feel they have to cover their $31 trillion butt with some gold too.

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