China Rapidly Moves To Global Yuan-Gold Trade Settlement With New International Gold Facilities
China's New International Network Of Gold Delivery And Storage Facilities Send Important Signal
On April 21, 2025 China released a joint statement by the People’s Bank of China, the National Administration of Financial Regulation, the State Administration of Foreign Exchange and the Shanghai Municipal People’s Government.
That statement contained the following sentence:
“We will explore the internationalisation of physical delivery for specific products [traded] on the Shanghai Gold Exchange by establishing offshore delivery and storage facilities.”
According to the South China Morning Post (SCMP), the joint statement reflects that “China will allow certain products traded on the Shanghai Gold Exchange to be delivered overseas by establishing storage facilities in other countries – part of a broader effort to promote the Yuan and reduce reliance on the US dollar and US financial systems, according to top regulatory agencies.”
The SCMP article further notes that total cross-border Chinese Yuan receipts and payments totaled the equivalent of US $4.1 trillion (T) in 2024.
By establishing a global network of gold delivery and storage facilities where Chinese Yuan can be directly exchanged for physical gold, China is moving to make the Yuan more widely accepted globally as a medium of exchange and also allowing Chinese purchases of oil and food, currently paid with US Dollars (USD), to be made with Yuan.
So, We’ll Take The Gold
The use of Yuan as a medium of exchange will likely not last a long time. As Alan Greenspan himself noted “Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted.”
However, because of the scale of global trade, this use of gold to settle trade payment, even at the margins, can rapidly create enormous demand for physical gold.
This step-change in global physical gold demand would spell a final lights-out for the London gold and silver price fixing scheme using largely unbacked promissory notes that has been in operation since 1987 - physical gold delivery demand is kryptonite to a leveraged promissory note scheme as is used in London, the world’s largest gold market.
To illustrate the impact of gold trade settlement on global demand, consider that total annual global trade currently amounts to 33T USD.
If 1T USD of global trade is settled in gold, at the current gold price this equates to 303 million (M) oz. of added physical gold demand compared to 2024’s global gold demand of 160 M oz.
In that event, you can add zeros to the fiat price of gold.
International trade settlement with naked fiat currency will become very difficult in the future.
Best regards,
David Jensen
Things are speeding up in the gold world, are they not? My personal theory on silver is that the multi decade suppression on silver to eliminate its monetization will end in its re-monetization and eye popping prices. Despite all the diversions and deceptions and lies the value of silver in the hand, like its big brother gold, will become ever more valuable as it becomes universally trusted as real money again.
It's amazing to me that the schene lasted so long. Since OTC derivatives are opaque and unregulated, they no doubt contributed to extend the time to collapse or TTC.
David Dubyne says we are about 7 weeks away from empty shelves due to container ship rerouting and cancellations. When normal channels of distribution fail, what will the price of anything be?
Start growing moringa in your back yard if you live in southern climes..