Timber, whilst I agree that some expect far too much from the 'Chinese gold fixing' in the short term, I think we need to see how things unfold in the longer term.
There is one thing I wish to comment on. Your remark: 'I don't really think that the Chinese government is stupid enough to try to underwrite the price of gold"
Just a little history. As a away of attempting to trade out of 'The Great Depression', the US$ at that time, required a 40% gold backing, thus the gold confiscation, and revaluation from $20 to $35/oz. To enable to print more $s.
The consequence of this was that the USTreasury ended up with 20k tonnes of gold. The US had become a powerhouse as a result of WW2, and together with her gold, negotiated the Bretton Woods Accord in 1944. This Accord further strengthened the US and her Dollar so the Almighty "Reserve' status.
The Accord allowed govt's to return the US$ and receive gold in return, (in many cases the gold was not returned, just shuffled around at Ft. Knox or wherever, with a sign, this belongs to ....) This all went reasonably well until LBJ decided he'd finish what the French couldn't in Vietnam. Of course, this wasn't as easy as LBJ had thought, with the result that apart from many lives, the US expended many dollars. Too many in fact. Countries were flooded with US$ and started wanting gold in return, a trickle turned into a flood. The US countered by firstly trying to appease by revaluing gold to $42, and then by surpressing gold by flooding the London pool. All gold was gladly accepted, till Nixon finally pulled the plug in Aug '71, having lost some 12k tonnes
So we can see, that whilst the US lived more or less within it's means for 20 years after the BW Accord, it wasn't till she started printing excess dollars, that other countries started to doubt the value of these dollars. Maybe if the US wasn't so trigger happy, we'd still be bubbling along with $35 gold.
So yes, if properly conducted, maybe China could pull off a gold for Yuan standard. I, too doubt it, but not imposssible.
But one other thing that China has learned. Because US$ expansion continued even after the Vietnam War, the US became a 'financial powerhouse', instead of a 'manufacturing' one, and started moving it's manufacturing to the slavery of Asia. The consequence of this was that China was able get out of poor subsistance ways, to become an economic force, much more quickly than would have been if the US, hadn't been so greedy. She gladly took the US$, and in 40yrs changed so much, that she is almost challenging the US for world economic surpremecy.
China learned and knows this, and won't make the same mistake, and allow, perhaps India or anyone to ever challenge. So, again, yes, a thoughtful gold backed Yuan currency is remotely possible, once confidence has been established.
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