April 17, 2009 -- What's this? The Financial Chronicle reports that China and India want the IMF to sell its entire holdings of gold to raise money for funding poor nations (yeah, since when have China and Russia [India?] been worried about poor nations?). The IMF has gold holdings of about $100 billion.
A very small part of China's reserves is in gold. It's obvious that China wants fewer dollars and more gold. If China went into the open market for gold, they would probably drive the price of gold up to $2,000 an ounce. My bet is that China would like to take in the whole $100 billion of the IMF's gold. And they're working on it.
Russell Comment -- China has been on a round-the-world collecting binge, buying up all sorts of reserves and businesses. Why would gold be any different? Clearly, China wants to be one of the most powerful nations in the world, and now they have the money to do it (and they're building the high-tech military to do it, particularly their navy).
For your interest, below is a partial list of nations with their gold holdings as a percentage of their reserves. Note that China has less than 1% of its reserves in gold.
I've said before that the Achilles Heel of the US is the reserve status of the dollar. This is what Russia, China and others (maybe Europe) are chipping away at. Harry Schultz writes this in his latest mailing:
Now the reserve status of the fiat dollar is being questioned and actually attacked. The world wants two things from the US -- it wants the US's help, and it wants US power off its back. Russia and China want to be the new world leaders, and the US with its powerful military is in its way. China knows that the nation with the gold and the nation with the strongest currency will be the world leader. My question -- will we see a gold-backed Chinese yuan? I think we may. China, by the way, is now the world's leading producer of gold.
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