On April 29, China’s Gold Association laid down some of the firmest hints that in the future, gold will be used as a primary form of money in the myriad of free trade zones and along the new Silk Road that they are constructing through the Far East and Central Asia. And in a report issued on Wednesday regarding expected gold consumption for the 4.4 billion people living within the 65 countries along the designated trade route, the accumulation of gold as both money and wealth protection has caused Eastern and Eurasian countries to purchase the metal in record amounts, and pave the way for a more secure form of trade currency after decades of using devaluing fiat scripts.
Additionally, as the center of power over the global financial system shifts from the West to the East, China and their fellow BRICS partners believe economic stability rests in a combination of free trade, and through the use of gold or other resource backed money.
Gold demand is expected to rise in China and other Asian countries along the “Belt and Road” routes in the coming few years, the China Gold Association said on Tuesday.
In a report on the likely impact on the gold market, officials estimated that the 65 countries along the routes, and their combined 4.4 billion population, currently account for more than half of the world gold production, and 80 percent of consumption.
“Asians have a tradition of collecting gold,” said Song Yuqin, deputy general manager of the Shanghai Gold Exchange.
“The gold trade is expected to become a significant component of transactions by ‘Belt and Road’ countries.” – China Daily
For centuries, global reserve currencies were always backed by precious metals, and this was true in the 20th century under the Bretton Woods agreement until 1971. And when former President Nixon removed the dollar from the gold standard to protect the exodus of U.S. gold bullion during a time of currency devaluation, currency changed to become purely fiat and based on the confidence of a government rather than a tangible asset.
Over the past decade the West and her economic allies have chosen a course of low interest rates, cheap money creation, and exported inflation to countries reliant upon dollars to purchase oil and other commodities in the world markets. And this declining trust and reliance by nations who have seen their economies suffer from central bank decisions are now realizing that currencies cannot be pegged to another fiat currency, as is the case now with the dollar and singular global reserve, but instead it must be pegged to a hard asset, whose value rises and falls in relation to the choices a nation makes in regards to their own monetary system.
The world is demanding a return to a gold or hard asset standard in some form in regards to trade and money. And once the Silk Road and Eastern trade zones agreements are fully complete, it appears very likely that China will be the one to introduce a gold backed trade note or currency, and that the critical mass needed to force change away from the dollar system will already be in place, and readily accepted during its transition.