Beijing has decided not just to hoard gold bars, but to challenge Donald Trump and the US dollar. Over the past decade, China has been collecting gold like a philatelist amassing rare stamps. Nowadays, its reserves may soon place it in the global top six among major gold-holding countries. When the price of gold first crossed the landmark $4,000 per troy ounce, it became clear: the perfect moment had arrived, thanks to Trump’s chaotic policies and global anxiety.
This year, China turned Hong Kong into an offshore gold-trading supermarket and opened the first “gold vault” of the Shanghai Exchange there. Now, they invite central banks and sovereign wealth funds from around the world to store their bullion in Chinese warehouses. The goal is to make the yuan not just a currency, but a “golden magnet” for storing value.
“All the factors have aligned: countries are diversifying reserves, volatility is rising, alternative payment systems are emerging,” Ding Shuang of Standard Chartered noted. As the world’s largest gold producer, China now wants to insist on its rules of the game. Interestingly, it is doing so at a moment when resistance is at its weakest.
The fourfold rise in gold prices over the last decade has provided a perfect backdrop for the idea of a “gold-backed yuan.” Investors from Japan to the UK are flocking to gold and Bitcoin, while silver is also seeing gains: it has soared to $50 per ounce. Politically, it is a brilliant move: more gold bars mean more trust in the yuan. The odds are that in the next crisis, China’s central bank will pull its currency out of the ditch.
Besides, China does not ignore the digital industry either: yuan-backed stablecoins may become the new “golden vehicle” for global financial flows. Beijing remains skeptical of cryptocurrencies, but even they now seem like a useful jab at the US dollar.
Still, there is a long way until a full replacement of the dollar by the yuan. Copper and oil are now quietly traded in yuan without challenging the dollar’s dominance. However, cross-border settlements are increasingly shifting toward the yuan, though not everyone is ready to dump their good old bucks for the sake of a new “gold standard.”
