http://seekingalpha.com/article/3178896-the-real-reason-china-is-buying-up-the-worlds-gold
[Once it opens the SGE Gold-Yuan pricing mechanism", if China
increases the number of yuan required to buy a troy ounce of gold, for
example, the USA must allow the dollar gold price to rise with it. If
not, the yuan will fall against the dollar. In other words, China will
determine the value of the US dollar on world markets, not the USA. That
shifts the power and leverage away from Washington DC and toward
Beijing, and will have a dramatic effect on the financial strength of
the US government.
...
Once China has enough gold, it will bid
up the yuan-denominated price into the stratosphere. Once it does that,
there are only three choices [For the US]. (1) Maintain credibility and
the reserve currency status by refusing to change the price of US dollar
denominated gold. If it does that, domestic industries will be crippled
by Chinese competition, because the yuan will become very cheap in
relation to the dollar. (2) Allow the dollar denominated price of gold
to skyrocket in synch with the yuan denominated price. That will end the
US dollar's reserve currency status. (3) Kow-tow to Beijing, seeking a
seal of approval from China for any serious financial maneuvers.
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