Hey Income Hunters,

Xi Jinping calls for China’s renminbi to attain global reserve currency status

This one matters. A lot.

While markets are distracted by Fed rate-cut hopes, AI hype, and day-to-day geopolitical noise, China just made its long-term monetary intentions crystal clear — and most Western analysts are still reading it through a century old lens.

President Xi Jinping has now openly reiterated that China’s goal is for the Chinese yuan (CNY) to achieve global reserve currency status. But here’s the catch — and this is the part Wall Street keeps missing:

China is building something very different. Their strategic approach of planning decades ahead may serve them very well for the new global monetary system. Consider these guide lines:

• China does NOT intend to become a reserve currency issuer the way the U.S. did.
• They do NOT plan to run endless deficits.
• They do NOT want foreign savings trapped inside their financial system.

As always we it is helpful for long-term investors to look back to knows what the future holds…

The Old Reserve Currency Model Is Broken

Historically, reserve currencies followed a painful trade-off:

• Run persistent trade and fiscal deficits
• Flood the world with your currency
• Open your capital account so foreign surpluses recycle back into your bonds
• Hollow out your industrial base over decades

That model worked for the U.S. — until it didn’t.

It left America with:

• Exploding debt-to-GDP
• Financialization replacing production
• A fragile Treasury market that must inflate or collapse

China watched this happen in real time — and chose another path.

China’s Reserve Currency Strategy: Gold, Not Debt

Power Income has been very clear on this for years:

China wants gold — not U.S.-style deficits — to do the balancing.

Here’s how it works:

• The CNY floats
• Gold floats higher in CNY terms over time
• Trade imbalances settle through gold revaluation, not debt accumulation
• Foreign trade partners are given a simple option:

“If you don’t trust CNY, convert it into gold.”

That’s it. No forced recycling into Chinese bonds. No need to absorb foreign savings. No defense-industrial deflation like the U.S. suffered.

The Numbers Make This Hard to Ignore

Let’s look at the math few are willing to do:

• Gold today:
  • ~In CNY 33,000 per oz
  • ~in US Dollars 4,800 per oz

Now run the scenario China is implicitly designing:

Let’s take a look at what it would take to balance trade between China and the world…  

China’s 2025 trade surplus (~$1.2T) ÷ 975 tons of gold imports would mean Gold in US dollars would rise to ~$38,280 per ounce

That’s the clearing price if gold — not Treasuries — does the balancing. Now the trade imbalance may not correct completely but Power Income expects a 300 to 5500% increase in the price of gold over the next 3-5 years.

Why This Is a Win-Win (And Why the U.S. Quietly Knows It)

If future U.S. administrations actually want to manage debt sustainably without depression-level austerity, a higher gold price is the pressure valve.

• China strengthens its balance sheet via gold revaluation
• The U.S. reduces real debt burdens via currency adjustment
• Trade continues without sanction warfare

This is the part most Western analysts still don’t grasp:

There will NOT be a new reserve currency stockpile.
Gold will simply rise until it becomes the reserve.

Putin and Xi weren’t being poetic in 2023 when they said they were “leading changes not seen in 100 years.”
They were being literal.

What the Gold-in-CNY Chart Is Quietly Screaming

The log chart of gold priced in CNY is doing something remarkable:

• Smooth
• Persistent
• Up and to the right at ~45 degrees

That’s not speculation. That’s policy.