China's Demand for Gold Has Trapped The West's Central Banks

[Peter Presland]

Thanks for posting, Peter, this was fascinating. I wonder if China's effective cornering of the gold market is why we are seeing so much of Jim Rickards, a consultant to the Pentagon and the CIA, of late?

http://jimrickards.blogspot.co.uk/

.....we cooked up a plan whereby Russia and China would pool their gold in a UK bank with a Swiss vault and issue a new currency backed by gold and say "Henceforth, any Russian energy exports or Chinese manufactured goods exports could only be paid for in the new currency. And if you wanted some, you had to deposit your gold and the bank would give you some of the currency."

In other words, it was a way to turn your back on the dollar and dethrone the dollar as the global reserve currency. So that was something we did in 2009 and frankly, some of the other people there, some of the Harvard types, we were ridiculed and people said, "That's ridiculous…"

I'm less up-to-speed on gold than I used to be but I have no doubt that control of the physical market if that is what the Chinese have effectively accomplished, will have major adverse implications for the Dollar.

The thing in that quote that jarred with me though - and I mean seriously jarred - was the idea that Russia and China would use a UK bank as physical custodian of gold bullion. Let them shuffle paper-promises and take their cut by all means (per the recent London and Frankfurt Yuan trading announcements), but the idea they would trust ANY western bank with the physical stuff is quite simply absurd IMO. Some scenario IOW, so what's the guy's game I wonder?