China’s gold hoard will slay the mighty dollar – Daily Reckoning 06-27-15

Salient to Investors:

China last reported its gold reserves in 2009 at 1,054.1 tonnes, just 1% of the value of its foreign currency reserves, and less gold reserves than Germany, the IMF, Italy and France, and a fraction of those of the US.

Bloomberg Intelligence believes China’s reserves exceed 3,510 tonnes, which would be second only to the US.  Bloomberg says China may soon want to disclose its gold holdings in order to have the yuan join the IMF’s currency basket of dollar, euro, yen and British Pound.

China has $4 trillion in foreign currency reserves at a time when central banks are doing their utmost to devalue their currencies. China has called for a new currency to replace the US dollar as the global standard, so having assets other than currencies on its balance sheet makes sense.

The IMF estimates 63% of central bank reserves are held in US dollars, so an alternative currency could hugely decrease dollar demand and flood the market with dollars.

Read the full article at http://www.businessinsider.com/why-chinas-gold-hoard-will-slay-the-mighty-dollar-2015-6

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