Gold-Backed Yuan Could Ultimately Replace USD As Reserve Currency

On Friday, International Monetary Fund Director Christine Lagarde basically green-lighted the proposal to add the Chinese yuan to the IMF’s Special Drawing Rights basket of currencies. Peter Schiff told RT’s Boom Bust that this is just another step in the direction of China surpassing the United States as an economic power. Ultimately, Peter believes China could back its yuan with the gold reserves it has been stealthily amassing and present its currency as a stabler alternative to the US dollar.

Peter went on to argue that the Federal Reserve will not hike the fed funds rate in December, pointing to the Paris attacks as a new excuse the Fed could somehow use to maintain an easy monetary policy. This would allow the Fed to draw attention away from the fact that American consumers aren’t spending like they used to as the US tumbles into a new recession this holiday season.

(Video length 00:07:40)

Highlights from the video:

“I don’t think it’s going to have an immediate impact, but I think it is a step in the direction in which China has been headed. And that is to make the yuan a reserve currency, and ultimately potentially to be a replacement for the US dollar, especially if they have the good sense to back up their currency with their enormous gold reserves, which I think China is deliberately underreporting. I think they are accumulating more and more gold quietly and maybe secretly, because I do think that ultimately that is their intention to have a gold backed yuan become the predominant currency in the world…

“I think everything is being clouded by the dollar bubble, dollar mania, and now the most recent events in Europe. The tragic shootings in France are causing more people to believe that there will be even more cheap money policies, more quantitative easing in Europe. We know that Japan has just slipped back into recession. Who didn’t see that coming? And so this has also got the dollar rallying once again and that’s seeking to depress other currencies, including gold. So in this environment, it’s really hard to see any currencies making some headway. But I do think when the dollar bubble bursts [and] the air starts to come out, this is going to be something that helps contribute to the appeal of the yuan as it ultimately rises significantly against the US dollar…