London-based bullion broker Sharps Pixley, formerly owned by Deutsche Bank, has suggested that Russia's gold reserves could overtake China’s by the end of this year.
According to statements from government officials, analysts and academics, both China and Russia see gold as an important element in the global financial system. China has reportedly called for gold to be included in the basket of currencies which makes up the IMF’s Special Drawing Rights (SDR) – some will argue that gold, in effect, should be treated as a currency, others will disagree! Certainly Russia’s President Putin is a gold believer. The Chinese hierarchy is perhaps a little more circumspect in its open support for gold, but both nations are keen to see the US dollar dominance of world trade – particularly with respect to oil and gas – depleted and see gold as one of the tools for helping them achieve this objective.
Nothing surprising here for those who have been paying attention, but it's interesting that even among western analysts, the possibility of using gold to chip away at U.S. dollar dominance is now being discussed openly. Even in London.
Is the West beginning to realize that the dollar isn't indestructible?
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