22 THE BiG DROP
was merely recognition of a process of dollar reserve domi-
nance that had started in 1914.■ Today, The Dollar is Slipping
The significance of the process by which the dollar replaced
sterling over a 30-year period has huge implications for you
today. Slippage in the dollar’s role as the leading global reserve
currency is not necessarily something that would happen over-
night, but is more likely to be a slow, steady process.
Signs of this are already visible. In 2000, dollar assets were
about 70% of global reserves. Today, the comparable figure is
about 62%. If this trend continues, one could easily see the
dollar fall below 50% in the not-too-distant future.
It is equally obvious that a major creditor nation is emerging
to challenge the U.S. today just as the U.S. emerged to challenge
the U.K. in 1914. That power is China. The U.S. had massive
gold inflows from 1914–1944. China has massive gold inflows
today.
Officially, China reports that it has 1,054 metric tonnes of
gold in its reserves. However, these figures were last updated
in 2009, and China has acquired thousands of metric tonnes
since without reporting these acquisitions to the IMF or World
Gold Council.
Based on available data on imports and the output of
Chinese mines, it is possible to estimate that actual Chinese
government and private gold holdings exceed 8,500 metric
tonnes, as shown in the chart below.
Assuming half of this is government owned, with the oth-
er half in private hands, then the actual Chinese government
gold position exceeds 4,250 metric tonnes, an increase of over
300%. Of course, these figures are only estimates, because
China operates through secret channels and does not officially
report its gold holdings except at rare intervals.