Russians Stunned As Chinese Leader Pushes Gold Backed Yuan

"...Also, Eric, I was invited to give a speech at the first ever Chinese Gold Congress, which was sponsored by the Chinese government and the 5 big gold companies, including (state owned) China National Gold.  There was a heavy Chinese government representation (600+ attendees).  The fact is that the Chinese remain bullish on gold and they have been buying up to 1/3 of world supply.

All five Chinese producers echoed that their reserve life is something that concerns them.  So all of them are looking internationally to acquire reserves in the ground.  Even the president of China National Gold said that the renminbi, which is becoming internationalized, should have a gold backing.

It was also announced that the Chinese have planned another gold vault which will be equipped to store about 1,900 additional tons of gold.  And that will be located across from Hong Kong in the Chinese city of Shenzhen.  I believe that brings the total number of gold vaults in China to four.  This is necessary because they are such a big player in the physical market and their presence in the gold market will only increase over time.

When I was in China the Shanghai Gold Exchange announced that they will be trading gold internationally, and they intend to set the physical price for gold.  The importance of that, Eric, is that they are going to initially introduce something like 11 renminbi contracts.  So gold will be transacted and settled in renminbi instead of the U.S. dollar.

All the big houses are there -- HSBC, Goldman, ANZ, etc.  In fact, recently we’ve seen even more evidence of the huge appetite on a physical basis that the Chinese have.  So together with the vaults and the changes at the Shanghai Gold Exchange opening up for international investors, this tells me the Chinese are setting up to dominate the gold market in the future as they continue to soak up the world’s available supply of gold.

I also found it interesting that the Russians were attending and listening intently at the Chinese Gold Congress.  I’m sure the Russians were surprised at the open discussion of a Chinese gold backed currency.  This shows that the Western sanctions have moved Russia and China closer together as the Russians look to the East for financing.  We also know that the Russians have been big buyers of gold.  The Russians have moved up their reserves from 600 tons to well over 1,000 tons.  So the Russians also continue accumulating gold.”

Ing added:  “What we are seeing is the last gasp in terms of U.S. dollar strength.  You see the Chinese, Russians, and other countries buying currencies other than the U.S. dollar.  In fact, this move away from the dollar will be one of the catalysts to move gold higher.  We seem to be in the midst of a currency war where every country is trying to weaken their currencies, including the Japanese and the Chinese.  These currency wars are a very favorable backdrop for higher gold prices.  So on a risk/reward basis, the downside is somewhat limited in gold and the sky is the limit on the upside.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/9/20_Russians_Stunned_As_Chinese_Leader_Pushes_Gold_Backed_Yuan.html