Gold convertible Chinese Yuan ---> potential new global settlement currency
Great changes unseen in hundreds of years are taking place in global markets in lockstep with geopolitical developments. With global trading partners having to now pay a "moron premium" when dealing with the the dollar as a settlement medium, capricious tariffs that change daily depending on what dear Don TACO has recently eaten for lunch, and potential capital controls being imposed by Treasury on foreign owners of US financial instruments, the USD is rapidly losing its lustre as the global reserve currency (not to speak of its declining value as more and more financial institutions realize that the $37 trillion national deficit cannot mathematically ever be repaid).
Enter China in 2025 with a gold-convertible CNY/ RMB.
Two months ago Bullion Star, the Singaporean precious metals dealer with branch offices in New Zealand and the United States, tweeted the following in response to an article in _The South China Morning Post_:
>China is now accelerating the internationalisation of the Yuan via Gold -> ... China to boost yuan with overseas gold storage facilities as it challenges US hegemony | South China Morning Post
Original link: https://xcancel.com/BullionStar/status/1915484496906063898#m
Earlier today Ronan Manly, senior analyst at Bullion Star, writing on his personal twitter for his private precious metals newsletter, provided a translation of the Shanghai Gold Exchange's announcement (in Chinese) of how gold delivery and storage would work vis-à-vis a new warehouse in Hong Kong.
English translation link: https://xcancel.com/BullionBrief/status/1938073273927143666#m
Former central banker Kathleen Tyson, an American living in London, commented on Manly's post:
>CNY is now a gold redeemable currency with gold delivery via a vault in Hong Kong.
>
>Anyone with surplus CNY who prefers gold can buy gold on Shanghai Gold Exchange, take delivery in Hong Kong, vault or ship globally as appropriate to their security and liquidity preferences.
Link: https://xcancel.com/Kathleen\_Tyson\_/status/1938094401479475404#m
David Lee, the China supply chain expert based in Toronto, added:
>Before 1970s, Chinese called USD as US Gold (美金) because one can exchange excess USD into gold [.\] After Nixon, Chinese called USD as US Yuan (美元) just like RMB is Yuan, backed by govt only [.\]
>
>China knows the drawback of replacing USD as reserve currency is to have RMB supply massively expanded and China needs to hold a trade deficit like US for decades.
>
>It wants the ability to use RMB to settle trade. But few trust RMB. So, making RMB convertible to something other than its products and services will make RMB more acceptable to others....
>
>So, RMB is not a reserve currency, gold is [.\] But RMB is a settlement currency [.\]
Link: https://xcancel.com/DavidLe76335983/status/1938310611647271409#m
Luke Gromen, the independent macro analyst, writing in response to China economist Michael Pettis and hedge fund manager Michael McNair (who also has a focus on macro owing to his background as a former quant):
>China has been telling its people to buy gold for >20 yrs.
>
>PBOC has been saying "We will use gold to internationalize CNY" for >10 yrs.
>
>Russia & Iran have been selling oil in CNY for >10 yrs.
>
>Offshore CNY recycled into Chinese goods & gold = virtuous cycle of trade for Chinese commodity creditors & consumers.
>
>Gold/CNY chart & gold/commodity chart prove this is happening, & almost no one in the west is willing to see it, b/c they refuse to take off their USD centric "beer goggles" [.\]
Original tweet thread: https://xcancel.com/LukeGromen/status/1938237262245847077#m
Geoffrey G. Michel
Great changes unseen in hundreds of years are taking place in global markets in lockstep with geopolitical developments. With global trading partners having to now pay a "moron premium" when dealing with the the dollar as a settlement medium, capricious tariffs that change daily depending on what dear Don TACO has recently eaten for lunch, and potential capital controls being imposed by Treasury on foreign owners of US financial instruments, the USD is rapidly losing its lustre as the global reserve currency (not to speak of its declining value as more and more financial institutions realize that the $37 trillion national deficit cannot mathematically ever be repaid).
Enter China in 2025 with a gold-convertible CNY/ RMB.
Two months ago Bullion Star, the Singaporean precious metals dealer with branch offices in New Zealand and the United States, tweeted the following in response to an article in _The South China Morning Post_:
>China is now accelerating the internationalisation of the Yuan via Gold -> ... China to boost yuan with overseas gold storage facilities as it challenges US hegemony | South China Morning Post
Original link: https://xcancel.com/BullionStar/status/1915484496906063898#m
Earlier today Ronan Manly, senior analyst at Bullion Star, writing on his personal twitter for his private precious metals newsletter, provided a translation of the Shanghai Gold Exchange's announcement (in Chinese) of how gold delivery and storage would work vis-à-vis a new warehouse in Hong Kong.
English translation link: https://xcancel.com/BullionBrief/status/1938073273927143666#m
Former central banker Kathleen Tyson, an American living in London, commented on Manly's post:
>CNY is now a gold redeemable currency with gold delivery via a vault in Hong Kong.
>
>Anyone with surplus CNY who prefers gold can buy gold on Shanghai Gold Exchange, take delivery in Hong Kong, vault or ship globally as appropriate to their security and liquidity preferences.
Link: https://xcancel.com/Kathleen\_Tyson\_/status/1938094401479475404#m
David Lee, the China supply chain expert based in Toronto, added:
>Before 1970s, Chinese called USD as US Gold (美金) because one can exchange excess USD into gold [.\] After Nixon, Chinese called USD as US Yuan (美元) just like RMB is Yuan, backed by govt only [.\]
>
>China knows the drawback of replacing USD as reserve currency is to have RMB supply massively expanded and China needs to hold a trade deficit like US for decades.
>
>It wants the ability to use RMB to settle trade. But few trust RMB. So, making RMB convertible to something other than its products and services will make RMB more acceptable to others....
>
>So, RMB is not a reserve currency, gold is [.\] But RMB is a settlement currency [.\]
Link: https://xcancel.com/DavidLe76335983/status/1938310611647271409#m
Luke Gromen, the independent macro analyst, writing in response to China economist Michael Pettis and hedge fund manager Michael McNair (who also has a focus on macro owing to his background as a former quant):
>China has been telling its people to buy gold for >20 yrs.
>
>PBOC has been saying "We will use gold to internationalize CNY" for >10 yrs.
>
>Russia & Iran have been selling oil in CNY for >10 yrs.
>
>Offshore CNY recycled into Chinese goods & gold = virtuous cycle of trade for Chinese commodity creditors & consumers.
>
>Gold/CNY chart & gold/commodity chart prove this is happening, & almost no one in the west is willing to see it, b/c they refuse to take off their USD centric "beer goggles" [.\]
Original tweet thread: https://xcancel.com/LukeGromen/status/1938237262245847077#m
Geoffrey G. Michel
Fouvry, the Rio de Janeiro-based financial industry economic historian/ trends analyst in a 17-part thread explains (from the time of the original _SCMP_ article) the significance of gold becoming the reserve asset with a gold-backed CNY being a global settlement medium:
>1/17
>There are wide consequences of establishing the Gold deliveries outside of China....
>
>2/17
>Gold spread means Gold is being shipped from West to East as people do a discharge of debt (USD). This is a very old trade settlement mechanism. H. Thornton 1802, Juglar 1880, Baring (basically everybody knows....
>
>4/17 So China can drain its own trade surplus and the other countries that have a surplus with China can also drain via China. So double drain from overvalued FX as reserves from West to East.
>
>5/17 It has the benefit of preventing the RMB from becoming a reserve currency and losing competitiveness in Trade/ manuf because of reserve status. The way to achieve it is for net exporters to China to get Gold.
>
>6/17 The other benefit is that the exporters to China don't experience repression of their currency and their purchasing power is enhanced since they don't get paid in double counted asset (Currency purchasing power is duplicated) but single counted asset (Gold transfer)....
>
>9/17 Settlement in non- double counted assets (transfer instead of double counting of purchasing pwoer) means that exporters to China have more purchasing power to buy from China than if they were getting paid in Yuan. No repression of commodities import.
>
>10/17 So consumption is not artificially inflated in China via paying exporters with RMB, but competitiveness of manuf is maintained and exporters to China have more purchasing power to import from China....
>
>16/17 As we explained China is encouraging/ helping other countries to get rid of the plantation money. Basically Xi just freed countries in Western Africa who pay triple seigniorage instead of only national seigniorage
>The EUR seigniorage paid on USD (kept as reserves)
>The Franc CFA paid to France
>And their own national seigniorage (this one is normal), the other two are a scandal.
>Balance is the objective....
Voilà. A de facto new world reserve currency (gold backed CNY) that avoids the Triffin dilemma and the its attendant problems--domestic inflation, increasing financializatoin destroying productive industrial capacity--that come with having reserve currency status.
https://redd.it/1llipyo
@r_Sino
>1/17
>There are wide consequences of establishing the Gold deliveries outside of China....
>
>2/17
>Gold spread means Gold is being shipped from West to East as people do a discharge of debt (USD). This is a very old trade settlement mechanism. H. Thornton 1802, Juglar 1880, Baring (basically everybody knows....
>
>4/17 So China can drain its own trade surplus and the other countries that have a surplus with China can also drain via China. So double drain from overvalued FX as reserves from West to East.
>
>5/17 It has the benefit of preventing the RMB from becoming a reserve currency and losing competitiveness in Trade/ manuf because of reserve status. The way to achieve it is for net exporters to China to get Gold.
>
>6/17 The other benefit is that the exporters to China don't experience repression of their currency and their purchasing power is enhanced since they don't get paid in double counted asset (Currency purchasing power is duplicated) but single counted asset (Gold transfer)....
>
>9/17 Settlement in non- double counted assets (transfer instead of double counting of purchasing pwoer) means that exporters to China have more purchasing power to buy from China than if they were getting paid in Yuan. No repression of commodities import.
>
>10/17 So consumption is not artificially inflated in China via paying exporters with RMB, but competitiveness of manuf is maintained and exporters to China have more purchasing power to import from China....
>
>16/17 As we explained China is encouraging/ helping other countries to get rid of the plantation money. Basically Xi just freed countries in Western Africa who pay triple seigniorage instead of only national seigniorage
>The EUR seigniorage paid on USD (kept as reserves)
>The Franc CFA paid to France
>And their own national seigniorage (this one is normal), the other two are a scandal.
>Balance is the objective....
Voilà. A de facto new world reserve currency (gold backed CNY) that avoids the Triffin dilemma and the its attendant problems--domestic inflation, increasing financializatoin destroying productive industrial capacity--that come with having reserve currency status.
https://redd.it/1llipyo
@r_Sino
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How will Iran - China relations develop after the Israeli war of aggression / regime change attempt?
Reading some stuff here, I’ve got the impression that the reason Russia and China aren’t helping Iran as much as a lot of people expect is not entirely because of the risks of helping Iran, but because Iran actively keeps a certain distance from Russia and China because they ideally want to have good relations with the west as well. Is this true?
Maybe getting a taste of sanction free economy for a few years got them unreasonably hooked on this goal?
If I were the leader of Iran, I’d be expecting another Israeli and American attack in future and look for closer relations with China so the country can actually have some decent air defence systems and an air force.
https://redd.it/1llu6h9
@r_Sino
Reading some stuff here, I’ve got the impression that the reason Russia and China aren’t helping Iran as much as a lot of people expect is not entirely because of the risks of helping Iran, but because Iran actively keeps a certain distance from Russia and China because they ideally want to have good relations with the west as well. Is this true?
Maybe getting a taste of sanction free economy for a few years got them unreasonably hooked on this goal?
If I were the leader of Iran, I’d be expecting another Israeli and American attack in future and look for closer relations with China so the country can actually have some decent air defence systems and an air force.
https://redd.it/1llu6h9
@r_Sino
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