Posted on 09/18/2025 8:41:37 PM PDT by delta7
Hong Kong’s push to become a global gold trading and reserve hub highlights a sharp contrast between real assets and endlessly printed fiat money. While the United States continues expanding its money supply — diluting purchasing power through debt-driven policies — China and now Hong Kong are moving in the opposite direction, stacking tangible wealth in the form of gold. By targeting storage capacity of over 2,000 tonnes within three years and rolling out tokenized gold investment tools, Hong Kong is positioning itself at the center of a new gold-based financial system.
Unlike dollars that can be created with a keystroke, gold holds centuries of trust as a store of value and hedge against inflation. Expanding RMB bond issuance further strengthens this pivot away from dollar-dependence. In short, while Washington leans on printing presses, Asia is quietly building a hard-asset foundation that wins global confidence in the long run.
Bank of China Billboard. Depicting the Gold backed Yuan.
The global financial system has reached a watershed moment: the US dollar's status as the world's uncontested reserve currency is rapidly eroding as nations urgently diversify away from US Treasuries and embrace gold as the ultimate reserve asset. In the wake of the weaponization of the dollar, especially after the 2022 sanctions on Russia, the world has woken up to the risks of holding dollar assets that can be frozen at a political whim. Consequently, central banks and sovereign wealth funds are dumping US debt and stacking gold at a record pace—a paradigm shift with immense consequences for US hegemony, international trade, and global power structures.
Sanctions, Weaponization, and the Spark of Exodus
The catalyst for this exodus was the US decision to freeze Russia's foreign reserves after its invasion of Ukraine in 2022. For decades, countries had used US Treasuries as risk-free reserves underpinning trade and economic stability. Suddenly, the message was clear: dollar reserves were only safe as long as the holder remained in Washington's good graces. This was not lost on other nations, especially those wary of US power or facing geopolitical friction.
As a result, the process of "de-dollarization" accelerated. Nations like India and China, along with scores of emerging markets, took dramatic steps to reduce their exposure to the dollar system, not out of theoretical opposition but hard-earned fear of being the next target.
Global Shift: From Treasuries to Gold
The scale of the shift is unprecedented. India, for example, slashed its US Treasury holdings by $15 billion in a single year, while boosting its gold reserves by nearly 40 tonnes in the same period. China, the world's second-largest economy, has consistently added to its gold reserves for more than ten months straight, now holding over 74 million ounces, while aggressively selling Treasuries and reducing exposure to dollar risk.
Chinese traders have flooded the Shanghai Futures Exchange vaults, setting records in gold inflows as economic and political uncertainty makes real assets like gold vastly more attractive than fiat promises from Washington. The implications are clear: for the first time in decades, gold is behaving as the world's alternate reserve asset, outshining both the dollar and US debt as the anchor of sovereign wealth.
Gold as the Untouchable Reserve
Unlike dollars or US bonds, gold cannot be sanctioned or frozen by any government. This makes it uniquely appealing, especially to countries often in Washington's crosshairs—Russia, Iran, Venezuela, and now even major emerging economies like India, Brazil, and South Africa. Gold is being used for trade settlement, wealth storage, and even as a backdoor way to circumvent the global reach of US sanctions.
The Pozsar-Glazyev Playbook, which envisions commodities like oil being traded for gold directly (rather than settled in dollars), is no longer just academic theory—it is being tested by Moscow, Beijing, and Delhi in real transactions. Imagine oil and gas, the lifeblood of the global economy, being priced in grams of gold rather than barrels of Brents or dollars. Should this model catch on, the ramifications for the dollar are seismic: a collapse in demand for US Treasuries, chronic fiscal deficits in Washington, and a power shift eastwards.
The Chinese Yuan: Quietly Backed by Gold
China's latest moves turbocharge this transformation. On June 26, 2025, the Shanghai Gold Exchange announced new gold trading contracts accessible offshore via Hong Kong, along with designated gold vaults that allow physical delivery and storage for international clients. This is not just a technical upgrade; it is a clear signal that the yuan is on its way to becoming, in effect, a gold-backed currency.
For the first time, surplus yuan from global trade can be instantly converted to physical gold, making the yuan not just a trade currency but a store of value—something previously reserved for the dollar. International counterparties, for years skeptical of the yuan's "closed market" status, now have unprecedented confidence that surplus yuan can always be redeemed for gold at market price through authorized Hong Kong vaults. This is monetary diplomacy with a quiet, devastating force: gold convertibility, without the fanfare or risk of a formal announcement.
The Internationalization of the Yuan
China's gold convertibility path has made the yuan a credible global trade unit—one that is overtaking the dollar in China's cross-border settlements (now at 52% versus 43% in dollars). As the yuan is used more for trade, debt issuance in yuan grows (Brazil, Egypt, and others have recently issued yuan-denominated debt), further embedding China's currency in the global system. This inexorable process makes de-dollarization a mathematical certainty, eroding the dollar's foundational place without the need for a grand Bretton Woods reset.
Implications: The End of an Era……
Precious metals can’t feed you, faith in your fellow man can.
—————-
Only Faith in Jesus will save you.
The U.S. government has 8,133 metric tons of gold reserves, China has 2,191 metric tons or a little more than 1/4 what the U.S. has, and the nations of Germany, France, Italy and Russia also have more gold reserves than China.
The U.S. can easily create a stable coin backed by its gold reserves and beat China at the game China wants to play.
Meanwhile the biggest investors and the biggest investments, in the world, are not in dollars or gold, they are in U.S. based global companies, presently worth about $63 trillion, while the market value of all China’s publicly traded companies is about $12 trillion or about 1/5th the value of U.S. publicly traded companies.
China’s efforts will prove futile.
Yeah, not much. About 250 billion US$ at today's gold price. Congress spends that much every two weeks.
An international currency printed by the Chinese Communist Party.
I personally think the US Gold Reserves have been squandered away as that is the real reason Trump has not checked Ft Knox....Gone bye-bye...If the truth came out that would be a huge gut punch to the US Markets...
Bra
I’m already there.
Calm down. Does China have a history of financial prudence?
“ China has quietly acquired 40,000 tons over the last few years…”
No. China has about 2500 tons total.
Talk about financial insecurity!
Regards,
Correct!
The Swiss franc is no longer officially backed by gold. Because of that unlinking, today, Swiss gold reserves would theoretically cover only about 10% of the Swiss franc.
FOR COMPARISON: U.S. govt.-owned gold reserves (approx. 8,134 tons) cover 22% of the $2.3 trillion in physical currency!
BOTTOM LINE: No other major currency is (unofficially) "backed" by a higher percentage of gold.
Regards,
He needs to take the immediate income from tariffs and do that.
He doesn't need to pay down much, just enough to slow or stop the 'debt clock'.
Maybe have a year of zero deficit because of the new tariff revenues.
Something!
The markets here and abroad will respond dramatically.
Yesterday Trump said he had gained 17 T (!) in tariffs. Was he not telling the truth, or exaggerating, or what?
But now it is clear that the Rats' strategy has been to overspend prodigiously so as to take down the USA. The GOP stupidly has played along.
Time to start improving the Debt/GDP ratio or we will be collapsing as France is.
A few payments on the debt will have dramatic effects in our markets and in the international ones.
will anyone trust that china will give them gold for their yuans?
All currencies will be monkeyed with by governments and their central banks. Gold backed ones too. When was the last currency 100% backed by gold. Probably the post WW2 US Dollar. Richard Nixon ended gold convertibility in 1971. Mostly because foreign nations (France especially) were exchanging their US dollars for physical gold and carting those gold bars back home. They were paying $35 per ounce gold.
Repeating — Just about all gold backed currencies are only partially gold backed. If China ever does what Delta7 wants, it will be a partially gold backed Yuan, with plenty of room for monkey business and shenanigans by the central CCP Government in Peking.
MOST INTELLIGENT POST IN THIS THREAD. CONGRATS!
“Then in 1968 the federal government stopped that. “
Kennedy wanted to bring them back. The bankers didn’t like that I guess.
I wonder how much of China’s gold is gold covered lead in storage?
Don’t put it past them to fake huge gold reserves.
The same China where the claims of their gold holdings are inflated. Where their gold brokers get caught selling gold plated tungsten bars? Like everything else they do/claim, there is no way to verify them.
You have been listening to the Western controlled World Gold Council. China is the largest Gold producer in the world, followed by Russia.
None of their 380 tons of yearly production has ever left China. In addition, they outsmarted the West by buying huge quantities of Gold from our corrupted Comex and LBMA, which rigged the prices down for years….they bought every price rig dip, depleting the West’s supplies.
https://www.gold.org/goldhub/data/gold-production-by-country
President Trump has not fulfilled his promise to audit our Gold reserves because we most likely do not have what we thought we had. The financial “ Emperor “ has no clothes.
Gold backed currency will lead to deflation and debtor impoverishment because the supply of gold is inflexible. It does not grow with the economy. This happened to the USA at various times, especially in the late 1800’s, when Presidential candidate William Jennings Bryan attacked our “cross of gold”.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.