'The World Is Moving Toward A De-facto Gold Standard

US, EU and China To Revalue Gold In New ‘De Facto’ Gold Standard

Last year 22 central banks, situated largely to the east of Germany, bought the largest amount of gold since 1967, the year the London Gold Pool collapsed. The gold repatriations by many European countries of the last few years are another sign that we are reaching the end of four decades of monetary calm.

This could bring about the largest monetary changes since the closing of the gold window by U.S. President Richard Nixon in 1971.

The United States wants its fiat dollar system to prevail for as long as possible. It has every interest in preventing a “rush out of dollars toward gold,” as happened in the 1970s. Since then bankers have been trying to exercise control over the precious metal’s price.

A 2012 study by the Chatham House gold task force suggested that the metal could be added to the International Monetary Fund’s special drawing right. One of the members of this task force was Lord Meghnad Desai, chair of the OMFIF advisers council. During a conference in Dubai he remarked, “We could ask that gold be nominated as part of the Special Drawing Right. That is one thing I think is quite likely to happen. This will be easier if China increases its official gold holdings.”

Beijing wants to increase its gold reserves in the shortest time possible to at least 8,000 tonnes. This would put China on par, in terms of its gold-to-GDP ratio, with the U.S. and European Union. It would open the way, should the need arise, for a possible joint US-EU-China gold revaluation to support the financial system.

In recent years there have been numerous statements demonstrating China’s understanding of the “dark forces” suppressing the price of gold on Wall Street. Zhou Xiaochuan, then governor of the People’s Bank of China, revealed in a 2009 article that the Chinese recognise the hypocrisy of U.S. policy toward gold: “After the disintegration of the Bretton Woods system in the 1970s, the gold standard, which had been in use for a century, collapsed. Under the influence of the dollar hegemony the stabilizing effect of gold was widely questioned; the ‘gold is useless’ discussion began to spread around the globe… Currently there are more and more people recognising that the ‘gold is useless’ story contains too many lies. Gold now suffers from a ‘smokescreen’ designed by the U.S., which stores 74% of global official gold reserves, to put down other currencies and maintain the dollar hegemony.”

Since then China and Russia have stopped buying U.S. Treasuries while adding physical gold reserves.

Clearly gold is making a remarkable comeback to the world financial system. A new gold standard is being born without any formal decision.

At least that is how Ambrose Evans-Pritchard, an influential international business editor of The Telegraph, described the ongoing efforts by countries to lay their hands on physical gold:

“The world is moving step by step toward a de-facto gold standard, without any meetings of G20 leaders to announce this.”