To the extent that there is a financial war between the American-led western alliance and the Russian Chinese nexus, gold plays a far greater role than any cryptocurrency. Since the early 1980s, China has embarked on a policy of secretly acquiring unknown quantities of bullion none of which has been permitted to leave the nation’s territory. It has financed gold mining, so that for over a decade it has become the largest national producer in the world. And when it was decided that the State in various accounts had accumulated sufficient bullion, it set up the Shanghai Gold Exchange and encouraged its own citizens, previously banned from gold ownership, to accumulate large quantities —so far, totalling over 20,000 tonnes.
And Russia, implementing gold accumulation policies more recently, has declared that between reserves and holdings in other state accounts it has about 12,000 tonnes. Legislation has been passed in the Dumas which will allow some or all of this gold to be transferred into official reserves, when they could easily exceed the reserves declared at the US Treasury. Moscow is setting up a new bullion exchange. Other Asian central banks have been accumulating gold as well. And tellingly, European central banks refuse to admit to any reduction in their reserve positions.
The battlefield in this financial tussle is over the US dollar. Russia and China, with the members of the Shanghai Cooperation Organisation, the Eurasian Economic Union, and BRICS (shortly to be joined by Saudi Arabia) either want to dispose of the dollar for the purpose of trade settlement entirely or want to become less dependent upon it. How is that to be achieved? The actions of Asian powers and their central banks are signalling to us that they will do so with gold.
This could become increasingly relevant in the months ahead. With Europe entering a continental winter, fuel and food shortages risk splitting the western alliance. The ascendency of gold-backed Eurasia over a divided western alliance can be expected to lead to further dollar weakness, reflected in the value of true money, which legally is only gold.