TORONTO - Canadian financier Ned Goodman says China is increasing its stocks of physical gold with the intention of eliminating the U.S. dollar as the world’s reserve currency, a move that would be favoured by Russian President Vladimir Putin.
“Mr. Putin is not a best friend of the United States,’’ said the Dundee Corp. Chairman during a speech to the Prospectors and Developers Association of Canada convention in Toronto on Monday.
“He would be in favour of eliminating the U.S. dollar as that reserve currency.”
A high profile asset manager and mine financier, Goodman said China has increased its physical gold reserves by 32% in the past year. “I think that the intention is to eliminate the U.S. dollar as the world’s currency,’’ he said. “It means that the U.S. is possibly bankrupt.
As Goodman is a renowned gold bug, it is hardly surprising that he would express such a view.
But one gold analyst said it may suit China’s purpose to have large reserves of gold. “I think they want to internationalize the Yuan,’’ said Dundee Capital Markets analyst Martin Murenbeeld. “They might say that if you don’t like our currency, then you can exchange it for gold,’’ he said.
However, Murenbeeld said it’s important to note that although China has increased its gold reserves to 1,054 tonnes, the yellow metal amounts to less than 1% of its foreign exchange reserves, which currently stand at US$4 trillion.
At current levels, Murenbeeld also said China’s reserves are still dwarfed by U.S. gold reserves which currently stand at 8,300 tonnes.
Still, if China were to try establish the Yuan as a reserve currency, that would definitely be an issue for the United States, he said.
Meanwhile, as debate raged over the Russian invasion of the Crimea, the price of gold was off 73 cents to US$1,349.77 an ounce.