According to this article, Russia and China are planning to issue a new gold backed currency.
As fiscally conservative as I am, this seems like a fool’s errand doomed for failure. Aside from limiting the amount of currency, this involves a high degree of trust. After all, as we know, governments can move off the gold standard overnight.
And I can’t think of 2 less trustworthy large governments to park my money than Russia and China. Maybe throw in Saudi Arabia.
I’d be interested in other opinions.
Except for my $3.1 billion in Wacky Wolf NFTs, I’m sticking with USDs.
They won’t if they are using fool’s gold…
As long as you allow Fractional Reserve Banking (FRB) you can’t have gold backed currency. All you have is a currency backed by the full faith and credit of the bank’s debtors.
So the Chinese public go to a window with this currency and say, “I want to exchange this for gold”. Is that how this works? Because that is the only definition of a gold backed currency.
If that is the case as the paper money collapses everyone will rush to the window for their smaller and smaller chunk of gold.
Great plan Stan, set those bars free.
Mainly from Russia. It is possible that China has been selling US bonds to fiance the trade in USD. This is both putting a ceiling on the price of gold and allowing Russia to continue to fund its war. This means that China has been able to exchange USD bonds which were about to decline for gold at a bargain price.
As far as the quip about Chinese stepping up to a window and either buying or selling gold, well it happens all the time in Asia. You can pick up 24k gold bangles, necklaces and and so on for little more than the bouillon price (in some countries, plus a tax) in the Chinese neighborhoods of Bangkok, Singapore as well as in Hong Kong and every city in China. The reverse is also true - that you can sell your gold back to the shop at nearly the bullion price.
Lots about how to do that in my travel book
I can buy gold in downtown Hartford, CT. I use USD. But I can not put my dollar to the US government and get a bar of gold. The currency is not backed by gold.
The Saudi Riyal really is backed by the USD. I forget exactly how that adds up but petro dollars.