China is turning the global financial world upside down: This could involve the introduction of a partially gold-backed yuan.
• China discloses gold reserves
• Partially gold-backed yuan challenges dollar dominance?
• Yuan and gold set to rise?
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A gold-backed yuan
China caused a stir around the world with a spectacular announcement: The country has disclosed verified gold reserves that are significantly higher than previous official holdings – enough to surpass the USA’s gold reserves. The next surprise followed shortly afterwards: the offshore yuan (CNH) is partially backed by gold. Holders will be able to exchange their CNH for physical gold in the future. The conversion rate is based on a USD/CNH ratio of around 5.0 and thus signals a significant appreciation of the Chinese currency compared to the previous level of 7.0.
Saxo Bank’s “Outrageous Prediction”.
With this move, China is putting its financial centers Shanghai, Shenzhen and Hong Kong at the center of a potentially new gold-based monetary system, as Saxo Bank explains in its Outrageous Predictions. In these Outrageous Predictions, the Danes design provocative future scenarios once a year – less as concrete forecasts, but more as creative stress tests for the economy, markets, technology and politics.
The focus for 2026 is also one of the most dramatic changes in the global financial landscape: Beijing’s “golden yuan” is intended to challenge the decades-long dominance of the US dollar and cause the price of gold to rise to a new record.
The so-called “golden yuan” promises more stability and independence from Western financial structures, credit ratings and US central bank policy. Initially, the system will only apply abroad – for example in Hong Kong and Singapore – while the domestic yuan will remain regulated by the state. The basis is a basket of currencies with gold as the main component, supplemented by US government bonds and raw materials to cushion fluctuations.
China could also offer gold-yuan swap lines to oil producers and Asian central banks and allow commodity trades – such as oil and copper contracts – to be settled in gold. Partner states could increasingly trade without the US dollar. As confidence in the system grows, more energy and commodity transactions are shifting to the yuan as investors reduce their U.S. Treasury holdings. As a result, the price of gold would rise to over 6,000 US dollars, the dollar would lose global influence, and the “golden yuan” would establish itself as a second reserve currency alongside the US dollar – not as a replacement, but as a serious alternative.
Yuan on the rise: Investment houses expect a return below 7 yuan per dollar
However, several major investment houses also expect the Chinese yuan to appreciate further in 2026, according to Reuters. In the new year, the currency could fall below the 7 yuan per US dollar mark for the first time since 2023, according to a consensus of nine banks.
The forecasts are based on falling interest rate differences between China and the USA, a stable monetary policy by the Chinese central bank (PBOC) and an easing of trade relations between the two countries. According to Goldman Sachs, the appreciation of the yuan is likely to be gradual and volatile, but could gain further momentum through export repatriations. ING expects the PBOC to keep the rate stable in a range between 6.90 and 7.30, saying currency stability is crucial to several policy objectives.
Goldman Sachs also sees the Chinese yuan as significantly undervalued and counts it as one of the most promising currencies in the world, as cryptopolitan reports. According to the bank’s calculations, the fair value of the currency is around 25 percent above the current level, which would correspond to a theoretical exchange rate of around 5 yuan per US dollar – compared to the current level of around 7.06. Accordingly, Goldman expects a significantly stronger appreciation by 2026 than the futures markets are currently pricing in.
Editorial team finanzen.net
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