The gold rush we’re seeing is a strategic hedge, and it’s worth noting that it’s not just China doing this either. By stockpiling gold, China may be preparing to back a potential future BRICS currency, and building a tangible anchor for the yuan’s credibility today.
The reserves can also act as a shield for their existing dollar horde. In the event of a Western financial crisis and a plummeting dollar, massive gold reserves would act as a backstop, helping to sterilize the devaluation of their US Treasury holdings. They’re essentially using a physical asset to insure their exposure is limited, all while slowly divesting from the US backed system.
The gold rush we’re seeing is a strategic hedge, and it’s worth noting that it’s not just China doing this either. By stockpiling gold, China may be preparing to back a potential future BRICS currency, and building a tangible anchor for the yuan’s credibility today.
The reserves can also act as a shield for their existing dollar horde. In the event of a Western financial crisis and a plummeting dollar, massive gold reserves would act as a backstop, helping to sterilize the devaluation of their US Treasury holdings. They’re essentially using a physical asset to insure their exposure is limited, all while slowly divesting from the US backed system.