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Tuesday, 16 June 2015

China Launching Gold Backed Global Currency



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.

Here is an excerpt from Jim Willie’s ‘Hat Trick Letter’
Jims recent article starts out with…

Many are the events, signals, and telltale clues of a real live actual systemic failure in progress. Until the last several months, such banter was dismissed by the soldiers in the financial arena. But lately, they cannot dismiss the onslaught of evidence, a veritable plethora of ugly symptoms of conditions gone terribly wrong and solutions at best gone awry and at worst never intended in the first place.

CHINA RECASTS GOLD BARS

China is well along an ambitious plan to recast large gold bars into smaller 1-kg bars on a massive scale. A major event is brewing that will disrupt global trade and assuredly the global banking system. The big gold recast project points to the Chinese preparing for a new system of trade settlement. In the process they must be constructing a foundation for a possible new monetary system based in gold that supports the trade payments. Initally used for trade, it will later be used in banking. The USTBond will be shucked aside. Regard the Chinese project as preliminary to a collapse in the debt-based USDollar system. The Chinese are removing thousands of metric tons of gold bars from London, New York, and Switzerland. They are recasting the bars, no longer to bear weights in ounces, but rather kilograms. The larger Good Delivery bars are being reduced into 1-kg bars and stored in China. It is not clear whether the recast project is being done entirely in China, as some indication has come that Swiss foundries might be involved, since they have so much experience and capacity.

The story of recasting in London is confirmed by my best source. It seems patently clear that the Chinese are preparing for a new system for trade settlement system, to coincide with a new banking reserve system. They might make a sizeable portion of the new 1-kg bars available for retail investors and wealthy individuals in China. They will discard the toxic USTreasury Bond basis for banking. Two messages are unmistakable. A grand flipped bird (aka FU) is being given to the Western and British system of pounds and ounces and other queer ton measures. But perhaps something bigger is involved. Maybe a formal investigation of tungsten laced bars is being conducted in hidden manner. In early 2010, the issue of tungsten salted bars became a big story, obviously kept hush hush. The trails emanated from Fort Knox, as in pilferage of its inventory. The pathways extended through Panama in other routes known to the contraband crowd, that perverse trade of white powder known on the street as Horse & Blow, or Boy & Girl.

source : http://worldtruth.tv/china-launching-gold-backed-global-currency/

The World's Next Gold Standard Will Come Through China And Africa, Not America

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The thoughtful piece, “China Should Issue Gold Bullion Coins That Aren’t As Practical In The U.S.” by Nathan Lewis allows me an opportunity to re-visit my growing conviction that the world’s next great episode in currency stability will come through the symbiotic relationship that exists between China and Africa, rather than from the United States of America.
There are a few reasons for this.

First, the China-Africa engagement has reached a plateau in its second phase which centered around infrastructure-for-oil arrangements.  Chinese investment in Africa’s physical capital is increasingly frowned upon and in order to successfully navigate a growing horizon of dissatisfaction in African nations where electorates feel exploited, the Chinese diplomatic onslaught and African leadership will have to find a new point of engagement – human capital.  It appears that both sides are getting closer to recognizing the estimated $700 billion gap in the financing of African Small and Medium sized enterprises (SMEs) as the way to go.

In a Forbes column last year I presented a path by which China could facilitate the usage of its currency, the yuan, throughout Africa .  The formula combined top-down incentives such as providing seigniorage to African governments with bottom-up steps like making yuan-denominated loans to entrepreneurs and SMEs.  Something related to the latter emerged in Tanzania in August with the National Bank of Commerce (jointly owned by Barclays, the International Finance Corporation, and the Government of Tanzania) enabling its banking customers to do business with Chinese partners directly in yuan, avoiding intermediate transactions in other currencies.  The bank proudly places the announcement front and center on its website, “Speaking during the launch, NBC’s Head of Treasury, Pius Tibazarwa said, ‘We have decided to launch the Chinese Currency offering, after realizing the need for this offering, owing to the growing business between Tanzania and China. We believe that this offering will ease the way our customers do business with their partners in China and vice versa.’”

Next door, Kenya is now determined to provide Africa’ first yuan clearing house which would allow the renminbi currency, of which yuan is the unit, to be utilized as a settlement currency.
With China as the only rational economic actor on the continent with deep and patient enough pockets for risk finance and Africa as the world’s largest laboratory of unbacked talent, and desperate to address its volatile population pyramids, the marriage is obvious.  And once the Federal Reserve finally tapers its quantitative easing, the largest African economies like Nigeria, now dependent upon hot money flows (but who already want to hold 10% of their foreign exchange in renminbi) will increasingly be incentivized to turn East.

And that raises another issue – why a national gold standard is less likely in the United States.
Nathan Lewis notes, “Despite promising moves on the state level, such as Texas’ recent move to remove taxes and endorse the use of gold and silver as money, the U.S. Federal government will probably remain opposed to any viable alternative to the now-dominant fiat dollar.”
And there is another barrier – the partisan divide.

The Federal Reserve remains the greatest impediment to currency stability and it can only be effectively opposed by a Left-Right, Progressive-Populist coalition as I noted in my recent column, “Senator Rand Paul Is Right To Hold Up Janet Yellen’s Federal Reserve Nomination, And Democrats Should Support Him.”
However, even though the Tea Party and Occupy Wall Street advance authentic points of grievance with the Fed, because so much of today’s ‘grassroots activism’ sells out to partisan affiliation, the Left and Right are controlled more by their reactions to one another than across-the-aisle points of agreement.  An understanding of why the country is so divided would require the reading of an excellent 400-plus page book – Avi Tuschman’s Our Political Nature: The Evolutionary Origins of What Divides Us, which of course most Americans aren’t going to do.  My humble contribution is an in-depth interview with him about the ideological partisan divide .

So, Afro-Optimism contrasts with American-Pessimism and the continued U.S. anti-China angst and unbridled military operations in Africa only contribute to a deeper China-Africa embrace that will impact dollar hegemony.

So how will it all happen?
I believe by this decade’s end we’ll see a gold-backed currency in Africa in one of three ways- through a common market optimal currency area; a series of regional parallel currency regimes which will lead to single currency; or through a local gold-backed currency which becomes so attractive in a multi-currency environment that it compels regional and continental embrace.

As I advised the African Union in 2008, Africa is definitely an optimal currency area as defined by Nobel Prize Economist Robert Mundell – it has the necessary GDP, currency reserves, and improving labor and capital mobility to be sturdy enough to survive speculative attack and the ebb and flow of demographic changes.

But 53-African nations agreeing on a common market with a single currency has been a challenge with nothing concrete established since the 1991 Abuja Treaty which intended it all.  And regional monetary unions like the West African Monetary Zone (WAMZ) – the one with the most potential – have languished, continually postponing currency issuance.

So, it now seems far more likely that the process will be bottom-up with the central bank of a single African nation issuing a 100% gold-backed currency that would not initially replace any other currency as legal tender.

By allowing the electorate to freely choose to use the new currency in a multi-currency environment, good money would likely win over bad and over time a young gold medium of exchange would become the ‘people’s money.’  Seeing its success, neighboring governments would throw in enough reserves to make it a credible regional currency.

Where does China fit into this?
It could either provide aid in the form of gold bullion or give an implicit indication of its support to African nations who take this route or it could make millions and billions in yuan-denominated loans to African entrepreneurs in a gold-based currency of its own.

Is this any more of a long-shot than seeing the dollar tied once again to gold?
I don’t think so.


source : http://www.forbes.com/sites/cedricmuhammad/2013/11/01/the-worlds-next-gold-standard-will-come-through-china-and-africa-not-america/
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