China could crash US dollar with 30,000 tons of gold: commentary

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China has the ability to crash the unstable US dollar with 30,000 tons of gold reserves, says Chinese economic observer Jin Zihou.

In a commentary posted online, Jin noted that former US Federal Reserve chair Alan Greenspan once said that the renminbi could become unexpectedly powerful in today’s financial system if Beijing would convert its US$4 trillion in foreign reserves into gold.

With the US dollar growing more unstable and China being America’s largest creditor, Beijing could potentially crash the US dollar with 30,000 tons of gold, Jin said.

The US dollar still accounts for 60% of global foreign reserves, though there are many countries hoping to become less reliant on the US dollar. If China really wants to challenge America’s place in the global trade and finance markets, it will have to do so via a significant amount of gold, Jin said.

Bloomberg estimates that since the last official announcement in April 2009, gold reserves held by China’s central bank may have doubled to 3,510 tons. This would make China the second largest keeper of gold in the world behind the United States’ 8,133.5 tons.

However, Alasdair Macleod, head of research for GoldMoney, states that China could have easily piled up 25,000 tons of gold between 1982 and 2003, meaning its gold reserves could have exceeded 30,000 tons by now.

It is suspected that China could be preparing the release an update of its gold reserves because the country’s decision-makers appear to be trying to push the yuan into the International Monetary Fund’s special drawing rights basket along with the US dollar, the euro, the Japanese yen and the pound sterling.

Full article: China could crash US dollar with 30,000 tons of gold: commentary (Want China Times)

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