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China Moves The World Closer To A Gold-Backed Currency

Johnathan Maverick
Written by:
Johnathan Maverick
Dan Blystone
Reviewed by:
Dan Blystone
Chinmay Soni
Fact-checked by:
Chinmay Soni
Updated:
July 23, 2026

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Economic analysts such as Alasdair Macleod and Mario Maneco believe that China is deliberately moving toward establishing a gold-backed yuan as the world’s premier reserve currency. China is shoring up its financial position with a massive gold reserve, while the US dollar continues to decline in value.

Most of what I’ve written in this article was derived from listening to a recent conversation between the global economic analysts, Alasdair Macleod and Mario Maneco. However, there’s also information gleaned from other sources, along with, as ever, my own observations and opinions.

Economic analyst Alasdair Macleod often makes a point of clearly explaining the basic truth about fiat currencies – that they are not anchored by anything tangible, such as gold. Thus, they only have value to the extent that users have faith in them as having value, or have faith in the government issuing the currency. If users begin having doubts about the value of a fiat currency, its value – and widespread use – can quickly plummet. And that’s exactly what Macleod believes is going on with the US dollar and other major Western currencies.

“While we go to hell in a handcart with our currencies, China is already on the way to protecting its currency from the same fate (with gold).”– Alasdair Macleod

A precarious position for the US dollar

Alasdair has long argued that the exponential rise in gold prices (and silver appears to be starting its own rocket shot upward now) is not a reflection of an actual increase in the value of gold – but, rather, a steady and accelerating decrease in the value of the US dollar and the other major fiat currencies. According to Macleod, about the only thing that’s keeping foreigners holding massive amounts of US dollars (approximately $130 trillion) is their desire to invest in US stocks. That circumstance means that a downturn in the US stock market could result in a massive dumping of US dollars by foreign investors in short order.

Besides de-dollarization around the world, the major force that’s been inflating the dollar and threatening to collapse its value is the massive overhang of US debt – more than $35 trillion. The other major Western powers, such as the UK and the EU, are locked in similar debt bubbles. That massive debt becomes ever more threatening if a recession ensues, since that would lead to a decrease in the tax revenues that are necessary to keep a debt crisis at bay.

Macleod also points out the similarity – high global debt, a roaring overvalued stock market, and major tariffs – to the conditions in 1929 that led to the Great Depression. He firmly believes that, in the end – although he freely admits that he isn’t certain about how governments will try to deal with it – there is no escaping a massive global financial crisis.

Gold-backed yuan may challenge flagging dollarGold-backed yuan may challenge flagging dollar

China rises – on a pile of gold

Meanwhile, China is accumulating gold and silver on an unprecedented scale. It has amassed a gigantic gold reserve – a reserve which would make China transforming the yuan into a gold-backed currency a relatively easy maneuver. By building up this massive gold reserve, China is positioning the yuan/renminbi as the number one reserve currency for the BRICS nations, the Shanghai Cooperation Organization (SCO), and, ultimately, for the whole world. Keep in mind that, with the BRICS nations, the SCO, and all the countries along the Silk Road that China is investing in – you’re talking about 70% of the world’s economy.

China’s consumer economy is already larger than that of the US, and it continues (although, admittedly, by virtue of a lot of industrial espionage) rapidly expanding its technology growth. Macleod sees China working – through BRICS, the SCO, and its Silk Road Initiative - toward what he terms a new industrial revolution for underdeveloped countries. He sees emerging market demand as likely to drive the demand for gold and other commodities higher, while driving the desire for fiat currencies lower.

A major move the Chinese government made earlier this year was announcing, through the Shanghai Gold Exchange – that it would be opening bullion vaults in Hong Kong and Saudi Arabia, and that other gold trading centers would follow. The vaults in Hong Kong were quickly opened and are creating tokenized gold investment instruments. In Alasdair Macleod’s view (and I concur), this is setting up financial centers where gold can easily flow in and out as a counterpart to the Chinese yuan. Macleod sees this as China, in effect, moving to set up a sort of new “Bretton Woods Agreement” (with China, rather than the US, as its financial centerpoint), where nations could settle international trades in what amounts to a gold-backed yuan.

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A power move for the Chinese Yuan

Macleod points out a key shift in policy. He notes that, for the past couple of years, there was a lot of talk within the BRICS countries and the SCO about settling international trades in their respective local currencies. But this year, all that talk has fallen silent. Macleod confidently concludes that the future clearly portends international trade settlements in a gold-backed yuan, stating that the Chinese are working diligently to establish the yuan as the new international reserve currency, backed by gold. China, Russia, Saudi Arabia, and India are already settling up some major trades in gold.

Yet another sign of a strengthening yuan is the expansion of the Chinese bond market. Russia is using Panda bonds to fund its operations. Egypt and Brazil have also issued bonds denominated in yuan. If you look at the financial situation across the globe, it’s only logical for countries to lean more heavily on the yuan and less so on the US dollar. I hearken back to the 2022 financial sanctions imposed on Russia by the US. That dollar weaponization was a wakeup call to the whole world – telling every country that investing in US dollars means that your money could be confiscated at any time. Since then, central banks all over the globe have been dumping dollars and stacking gold at an unprecedented rate.

In Macleod’s mind, it’s as simple as this: When it comes to international trade, countries want to settle up in a currency that has strong, stable value – and that is, ultimately, a currency that’s backed by “real money”, i.e., gold. He reminds us that gold has been the legal final monetary settlement commodity since the time of the Roman Empire.

Prepare for a multipolar monetary system, not an overnight currency shift

Rinat Gismatullin
Rinat Gismatullin Author and business expert

In my view, it is less important to predict whether China will formally launch a fully gold-backed currency and more important to recognize the broader structural shift: central banks are diversifying reserves, gold accumulation is accelerating, and the dollar’s uncontested dominance is gradually being questioned. That alone changes the long-term risk framework for global portfolios.

I would not recommend making extreme, all-in bets on a sudden dollar collapse or an imminent monetary reset. Currency transitions historically unfold over years, not months. However, I do believe investors should gradually reduce single-currency exposure risk. This means holding a diversified mix of assets: gold as a monetary hedge, selective exposure to non-Western currencies, and real assets that are less sensitive to fiat debasement.

If China does continue building a gold-anchored settlement framework within BRICS or trade blocs, the immediate implication will likely be incremental – more bilateral trade in yuan, more gold-settled contracts, and slow reserve diversification. The strategic takeaway is resilience, not speculation.

My recommendation is simple: prepare for multipolar monetary systems rather than betting on one currency replacing another overnight. In uncertain transitions, capital preservation and diversification matter more than ideological conviction about which reserve currency will win.

Conclusion

China’s strategic accumulation of gold reserves and its persistent efforts to internationalize the yuan underscore a deliberate campaign to challenge the U.S. dollar’s reserve currency dominance. By backing the yuan with solid gold assets and promoting bilateral trade deals denominated in yuan, China is signaling its intent to create a more stable and trusted alternative for global commerce. This maneuver not only enhances confidence among trading partners wary of dollar volatility but also sets a blueprint for emerging economies seeking to diversify away from dollar dependency. Ultimately, if China succeeds, the global financial order could face a seismic shift—proving that in the world of currency power, tangible assets and calculated ambition can rewrite the rules.

FAQs

What historical factors have influenced the move toward gold-backed currencies?

Historically, gold-backed currencies provided stability and trust because their value was anchored in a tangible asset. Periods of economic crisis or loss of confidence in fiat currencies, such as during the Great Depression, have renewed interest in gold as a monetary standard. China's current push for a gold-backed yuan reflects lessons from these events and the desire to offer an alternative to fiat-based monetary systems.

How might a gold-backed yuan reshape the balance of power among global reserve currencies?

A gold-backed yuan could shift the balance of power by reducing reliance on the US dollar and other major fiat currencies. By offering a currency tied to a physical asset, China positions the yuan as a more stable and attractive reserve option, especially for countries seeking to diversify away from traditional Western currencies and reduce exposure to policy risks tied to the dollar.

What risks or challenges could China face in implementing a fully gold-backed yuan?

Implementing a fully gold-backed yuan presents several challenges, including maintaining sufficient gold reserves to meet potential demand, managing fluctuations in gold prices, and navigating potential resistance from global financial systems entrenched in fiat currency practices. Additionally, a rapid transition could destabilize existing trade and investment frameworks.

How does rising global debt influence the push toward alternative reserve assets like gold?

Rising global debt, particularly in Western economies, increases concerns about the stability and value of fiat currencies. As debt grows, confidence in the ability of governments to honor liabilities decreases, prompting central banks and investors to seek alternative assets such as gold. This dynamic supports the movement toward gold accumulation and the consideration of gold-backed currency systems.

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Team that worked on the article

Johnathan Maverick
Johnathan Maverick
Financial Markets Expert

Johnathan M. is a U.S.-based writer and investor, a contributor to the Traders Union website.

Learn about our editorial policies
Dan Blystone
Dan Blystone
Contributor

Dan Blystone began his trading career in 1998 as an arbitrage clerk on the floor of the Chicago Mercantile Exchange (CME). He later traded bond and Eurex futures at proprietary firms such as Altea Trading, gaining valuable experience in high-frequency trading and risk management.

Chinmay Soni
Chinmay Soni
Head of Fact-Checking Department

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data.

Glossary for novice traders
Index

Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.

Chinese Yuan

The yuan (CNY) is the official currency of the People's Republic of China. The yuan is divided into 10 jiao, which are further divided into 10 fen.

Bitcoin

Bitcoin is a decentralized digital cryptocurrency that was created in 2009 by an anonymous individual or group using the pseudonym Satoshi Nakamoto. It operates on a technology called blockchain, which is a distributed ledger that records all transactions across a network of computers.

Cryptocurrency

Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

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