Indeed bruce thanks for this one, o what a lovely war!!All that...

Indeed bruce thanks for this one, o what a lovely war!!

All that is required is for policy-makers to choose a yuan ratio that equals the current exchange rate of 8.28 against the dollar at the prevailing gold price. For argument's sake, let us assume gold is US$420. In that case, a ratio of 3,478 yuan to an ounce of gold, would result in an exchange rate that exactly matches the current pegged rate of 8.28.

Starting from the current exchange rate would help policy-makers avoid the political and practical risks of choosing the ultimate size of any direct revaluation of the yuan versus the dollar. From such a neutral starting point, the yuan/dollar exchange rate would adjust automatically based on the gold price.