China is leading the world toward a gold standard by diverting what was previously oil for dollars into oil for gold.
China has been eating up global gold mine supply for about 10 years and now has 20,000 tons or more compared to the supposed 8,133 tons held by the U.S.. Their announcement of yuan for oil, convertible into gold, is a game changer.
Over the last few years, China has imported roughly 2,000 tons of gold annually. China and India are importing more than the 2,500 tons that are produced. It can only come from Western vaults. In order to pretend their financial systems and currencies are sound, the West (led by the U.S.) has been selling their gold reserves.
If China imports oil and pays with yuan and offers their yuan convertible to gold,
- How many oil producers will take them up on the conversion?
- How long can China and India import more than the world produces?
- Where will demand be satisfied if oil producers’ newly acquired yuan are converted to gold? The answer is they cannot …at current prices.
China watched as the U.S. was bled dry of gold leading up to 1971, and ever since. It understands the game. It is leading the world toward a gold standard by diverting what was previously oil for dollars into oil for gold.
By making yuan convertible into gold, China is creating a demand they know cannot be met by supply at current prices. Why?
- A higher gold price will make it difficult for other nations to accumulate gold. By freeing the gold price, China is assuring its place as a world financial leader.
- China will be devaluing the yuan versus gold, which will have many benefits.
- Moving the world to a gold standard means moving away from the dollar.
- This scheme avoids the Bretton Woods pitfall: Bleeding out treasury gold.
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