China Cable and gold

China Cable and goldMuch has been made earlier this week on "WikiLeak U.S. Embassy cable referred to Beijing gold reserves of China. The cable was sent to the same period in 2009 when China shocked the world by revealing that almost had doubled its gold reserves to 1,054 tonnes, from just 600 tonnes in 2003. A couple of months later, China said it was interested in getting an additional $ 80 billion worth of gold Dragon Treasure, close of 2600 tonnes on the basis of less than U.S. $ 1,000 gold at the moment (June 2009 near: $ 929.15).China is without a doubt, buying gold, and speculation about their motives, however, the extract of the cable highlights, in my opinion is: "China's gold reserves increased thus serve as a model and bring other countries to the gold reserves of the gold reserves are large. it is also beneficial in promoting the internationalization of the yuan. "In other words, if China is buying gold and other countries are willing to buy gold.
It seems that China was a pioneer. WGC projects that central banks are net buyers of gold this year for the first time in a generation.Besides China, the latter notable buyers of gold sovereigns include Russia, India, Mexico, Bangladesh, South Korea and Colombia.Venezuela's recent request that its gold reserves to be repatriated and the nationalization of the works of gold mining and processing in the subject. This week, Romania and Bolivia said they wanted to build its gold reserves, possibly through the purchase of domestic production.
I do not think there is no doubt that China wants to improve the condition of the yuan as it continues to consolidate its position as an economic power in the world. In fact, Deming Trade Minister, said today that China is not only consider how to diversify their currency reserves (which is likely in gold reserves and other), but also plans to make it easier for Chinese companies to use the yuan to invest abroad.Latest exchange pacts with Russia and Brazil are just two examples of progress in this direction. China's participation in the rescue of the EU, through purchases on the periphery of the debt, were also considered as the Middle Kingdom trying to make inroads in the Eurozone.
Some have suggested that the cables are proof that China WikiLeak is trying to destroy the dollar's reserve status, but due to massive investments in China are in dollars and U.S. Treasury bonds, which looks like a very ill-advised strategy. I understand the desire to diversify China a currency that is devalued to the point consistently, but China is smart enough to know that we must not destroy the largest customer for its manufactured goods. Increased yuan (although strictly controlled Ascension) will be - as a byproduct - have a negative impact on the status quo, but it certainly is not just China that is driving this global change. In fact, we can be our worst enemy, as evidenced by S & P downgraded the sovereign debt last month the United States for what has become an extremely partisan political process.

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