A gold backing for China's renminbi?

Some central bankers may be listening to Ron Paul after all.

China, which will soon be the world's biggest economy, is rumoured to be thinking about backing its renminbi with gold, according to a post by Mountain Vision.

We expect the Chinese central bank to continue gradually accumulating gold, and we think that it might be planning a gold backing for the renminbi. If that were to happen, international acceptance would soar. Not for nothing was the enormous amount of gold reserves in the United States (N.B. the US reserves were at 29,663 tonnes in 1953) along with military dominance a central reason for the US dollar becoming the global reserve currency.

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The gold news ties in with the rumour that China is making a massive gold buy, at least 5,000 to 6,000 tonnes starting before the end of the year.

Billionaire investors, George Soros and John Paulson, have recentely piled into gold, even though the metal has moved sideways for most of the year.

China is expected to become the world's biggest economy in five years.