We know China wants to displace the U.S. dollar. But now we know how.
China is importing a lot of gold…
Jim Rickards is author of Currency Wars and The Death of Money. In an interview with The Epoch Times, Rickards details his meeting with the head of precious metals operations at the largest gold refinery in the world.
The refinery expanded its factory… works triple shifts… and runs 24 hours a day to produce 1,000 tons of gold annually.
Half of this is going to one consumer… China.
The bottom line… it's still not enough gold for China's appetite.
Rickards' response to why China is hoarding so much gold is no surprise to regular Crux readers.
"The international monetary system based on paper currencies is fragile and likely to collapse, and when the system needs to be reformed, the people with the largest voice at the table will be the people with the most gold."
Rickards doesn't think the yuan will be the next global reserve currency… at least not for the next couple of decades. It still has obstacles to overcome.
"China doesn't have to borrow because they have too many reserves. If they don't borrow then there are no bonds, and if there are no bonds, there can't be a reserve currency because there is nothing to invest in."
Ultimately, China is using gold to hedge against the inflating dollar… of which they hold trillions. As long as the U.S. Federal Reserve keeps inflating the U.S. money supply, China will need to hedge. And it appears their favorite hedge – gold – is not about to change any time soon.
Before long, China – not the U.S. – may have "the loudest voice at the table."
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