wikileaks flash: us gold rigging - china knows, page-8

It's all unwinding regardless. China either ends up with worthless US reserves or they can try and improve their strategic situation.

The USA was the consumer of last resort due to the privilege of having the world reserve currency. Their job was to consume and as long as China could sell to them everything was great. Now however the consumption is stopping, they're tapped out and unemployment is over 20% according to shadow stats.

China killed US manufacturing through their cheap imports, to revive employment and manufacturing the US has to demand that China unpeg their currency. If the yaun is unpegged China will no longer be the cheap manufacturing hub it was. The US just exports their problems back to China. China loses it manufacturing advantage and faces huge internal troubles.

China is in a position whereby it may need to confront the US for the rights of reserve currency status or at least position itself as a more dominant global currency. The monetary system is nothing but a confidence game, with the US and the Euro already on their knees, China may very well decide they have less to lose.

Same issues going on in the Euro zone, same countries may decide they have less to lose by bailing on the Euro. Having vaults full of gold will certainly be one way of gaining public confidence to whatever currency situation they decide on promoting.