Sources close to ‘Sun Worldwide’ suggest that the private fund is convinced that recent comments from the governor of the People’s Bank of China may be the clearest indication yet that China is growing increasingly concerned about the ability of the US to safeguard the value of its dollar-denominated holdings.
Zhou Xiaochuan said in an essay on the central bank’s website that it was necessary to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
‘Sun Worldwide’ have long believed that the position of the US dollar as the world’s reserve currency would be in serious jeopardy as investors began to realize that the stimulus measures being implemented by the Obama administration would debase the value of the currency.
‘Sun Worldwide’ also suggest that gold may be used to back a new reserve currency administered by the IMF although they conceded that this could be years away.
Gold was last used to back the US dollar until President Nixon abandoned the gold standard in order to continue funding the Vietnam War.
