Thursday, May 16, 2013

China to break free of the U.S. dollar....

word is already starting to leak out in Chinese newspapers that government officials intend to make the renminbi "fully convertible" by 2015.

What does that mean?

In a nutshell…

  • China's currency could be freely traded or exchanged for other currencies worldwide…
  • It would be common, easy to use and as widely accepted as the U.S. dollar, the euro, the yen and the British pound…
  • And it would become a prime candidate for use by the International Monetary Fund (IMF), right beside the U.S. dollar, the euro, the yen and the pound
That's right — I believe China's leaders are trying to make their currency just as liquid and internationally accepted as the dollar and the euro.

And it appears their efforts are succeeding…

As the Financial Times recently stated, "The exponential growth of the renminbi as a trading currency – and of the offshore renminbi market – continues to stun observers."

This past summer Japan and Brazil began direct trading of their currencies for renminbi – without using the U.S. dollar as an intermediate currency.

The Bank of England has reached an agreement with the People's Bank of China to conduct direct currency swaps.

Just weeks ago, Australia and China began preparations to directly trade their two currencies with each other without using the U.S. dollar as a bridge.

And Tesco – the 'Walmart' of Europe – is going to pay its Chinese suppliers directly in renminbi instead of pounds, euros, or U.S. dollars.

However, to keep the ball rolling, China needs more gold – MUCH MORE GOLD!

This Chinese Secret Beats Them All

A top director of the PBoC said it himself: "No asset is safe now. The only choice to hedge risks is to hold hard currency – gold."

And more and more Chinese economists… officials… and government advisors are voicing their agreement with him.

An official from the Depart of International Economic affairs even went so far as to publicly state China needs to add to its gold reserves to ensure national economic safety… promote remnimib globalization… and to hedge against foreign-reserve risks.

In other words, to break free of the U.S. dollar.

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