Gold At $64,000 – Bloomberg’s ‘China Gold Price’

Friday, June 5, 2015
By Paul Martin

By: GoldCore
GoldSeek.com
Friday, 5 June 2015

– Bloomberg Intelligence suggest gold-backed yuan see gold at $64,000 per ounce
– “Chinese gold standard would need a rate 50 times bullion’s price”
– As China-U.S. relations deteriorate, gold-backed yuan possible
– Dollar and financial and monetary dominance of U.S. at risk
– U.S. and China war of words continues to escalate
– China rejects U.S. hegemony in Southeast Asia
– Currency war to escalate

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to a recent article from respected Bloomberg Intelligence.

It seems like an outlandish forecast. However, as tensions between the U.S. and China continue to escalate such a scenario is not actually as implausible as it may first appear.

If China were to back its yuan with gold it would require a price of $64,000 per ounce according to a recent report from Bloomberg.

While Bloomberg give no details as to how they arrive at this figure, our “back of envelope” calculations would confirm that at its current value relative to the dollar the yuan would indeed require gold – priced in dollars – to be priced in the tens of thousands of dollars.

Chinese M1 money supply is roughly 33.64 trillion yuan which at todays exchange rate equates to around $5.4 trillion.

Bloomberg conservatively estimate China’s gold reserves at around 3150 tonnes although many analysts believe the figure to be much higher.

In order to back $5.4 trillion yuan with 3150 tonnes of gold, the gold price would need to be in the region of $48,600 per ounce.

Bloomberg conclude that, at today’s prices, it would be “basically impossible” for China to fully back its yuan with gold. Indeed, at $1,200 per ounce, it would require over 126,000 tonnes to back $5.4 trillion.

Bloomberg states that “there’s no evidence” that China seeks to adopt a traditional gold standard. However, China’s appetite for gold in recent years has been voracious and it is clear that they and the People’s Bank of China (PBOC) place great strategic importance on the precious metal.

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